Stock market today: Wall Street advances as bond yields fall ahead of inflation report

NEW YORK (AP) U.S. stock indexes are up slightly Tuesday, on track for another quiet day before potential fireworks later in the week.

The S&P 500 was up 0.3% at the start of the session, a day after remaining almost at a standstill. The Dow Jones Industrial Average was up 67 points, or 0.2%, as of 9:35 a.m. Eastern Time, and the Nasdaq Composite Index was up 0.4%.

Oil prices also remained sluggish and little changed, while Treasury yields eased somewhat in the bond market. Traders are making their final moves before the second half of the week brings several potentially market-moving reports, including Wednesday's highly anticipated update on U.S. consumer inflation. Large US companies will also begin publishing their reports on the profits they made during the first three months of the year.

The question hanging over Wall Street is whether inflation will cool enough to convince the Federal Reserve to make the interest rate cuts that traders are demanding and betting on. Some doubts have crept in following a series of warmer-than-expected economic reports, and traders now expect only two or three rate cuts this year. Some even mention the possibility of zero reductions. That's down from forecasts of six or seven reductions at the start of the year, according to CME Group data.

The Fed's main interest rate is at its highest level in more than two decades, and the fear is that rates too high for too long could cause a recession.

If fewer cuts occur this year, the onus will be on companies to generate strong earnings growth to justify the sharp moves in stock prices since the fall. The S&P 500 soared more than 20% from November to March and set several records along the way. Critics say stock prices look expensive by several measures, and either earnings need to rise or interest rates need to fall to make them more reasonable.

Bank of America strategists expect Wednesday's inflation update to show a slowdown after ignoring food and energy prices, which can zigzag sharply. Such an outcome would likely raise traders' expectations for a June rate cut, which the market currently views as slightly better than a coin toss probability.

Although rising oil prices this year have sparked concerns about a knock-on effect on inflation, oil is likely to rise well above levels seen even during the Russia-L. Ukraine to have a significant impact on underlying inflation, according to Bank of America rates strategist. » Meghan Swiber said in a report from BofA Global Research.

Benchmark U.S. crude added 0.1% to $86.50 a barrel, taking its gain for the year so far to almost 21%. Brent crude, the international standard, rose 0.1% to $90.43.

Besides oil, metal prices have also risen this year, and gold in particular has hit record highs. Mining companies helped lead the S&P 500 with some of the index's biggest gains. Newmont rose 3.3% and Freeport-McMoRan rose 3%.

Norfolk Southern rose 1.9% even though the railroad reported preliminary first-quarter results that fell short of analysts' expectations.

It also agreed to pay $600 million in a class-action lawsuit related to a fiery train derailment last year in eastern Ohio. The company said the agreement, if approved by the court, will resolve all class action claims within a 20-mile radius of the derailment and personal injury claims within a 10-mile radius for those who choose to participate in it.

On the bond market, the yield on 10-year Treasury bills fell to 4.38% from 4.42% Monday evening.

In Europe, stock indexes were mixed ahead of Thursday's European Central Bank decision on interest rates. Many investors expect rates to remain stable.

Stock indexes were also mixed in Asia, with Tokyo's Nikkei 225 jumping 1.1% but South Korea's Kospi falling 0.5%.

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AP writers Matt Ott and Zimo Zhong contributed.