Stock Market Today: Wall Street remains stable ahead of this week's Fed meeting

NEW YORK

U.S. stocks are mixed in quiet trading Monday ahead of a week with several top inflation reports due, as well as the Federal Reserve's latest meeting on interest rates.

The S&P 500 was up 0.1% in afternoon trading, close to its record set last week. The Dow Jones Industrial Average was down 50 points, or 0.1%, as of 1:04 p.m. Eastern Time, and the Nasdaq Composite Index was up 0.3%.

Southwest Airlines soared to one of the market's biggest gains, up 7.8%, after Elliott Investment Management said it took a $1.9 billion stake in the company and pushed for new leadership to modernize the operator's software, strategy and operations.

Diamond Offshore Drilling jumped 10.5% after Noble agreed to buy its rival in a cash-and-stock deal valued at about $1.6 billion. Noble added 5.4%, signaling that traders expect the combination to be a winner. Other energy producer stocks also rose as the price of crude oil recovered some of its steep losses since the spring.

Huntington Bancshares slumped to one of the market's biggest losses after cutting its forecast for a key component of profit this year. Its stock fell 5.3% and helped drag down other banks, including losses of 2.3% for Regions Financial and 2% for KeyCorp.

Apple was down 0.3% before a conference where analysts expect him to provide details on its move to artificial intelligence technology. The furore over AI on Wall Street has helped propel stocks to record highs despite concerns about high interest rates and the slowdown in the U.S. economy they are causing.

Data on the economy has been mixed recently, and traders are hoping it will eventually show a slowdown that stops short of a recession and is just the right size. A slowdown would put less upward pressure on inflation, which could encourage the Federal Reserve to lower its main interest rate from its most severe level in more than two decades.

But the data was difficult to analyze, with stronger-than-expected jobs reports Friday following weaker-than-expected reports on U.S. manufacturing and other sectors of the economy. Even within American consumer spending, which constitutes the core of the American economy, there is a stark divide between low-income households struggling to keep pace with persistently high inflation and higher-income households that are doing much better.

Ultimately, the data remains mixed, leaving all major macroeconomic outcomes still on the table for this year, according to Morgan Stanley strategists led by Michael Wilson.

Meanwhile, companies benefiting from the AI ​​boom continue to post strong growth, almost regardless of what the economy and interest rates are doing.

Nvidia, for example, is worth about $3 trillion and rose 1.7% on Monday after reversing an earlier loss. This is the first day of trading for the company after undergoing a 10-fold stock split to make its share price more affordable for more investors, after it soared to more than $1,000 amid AI frenzy.

Treasury yields in the bond market were mixed ahead of reports later in the week that will show whether inflation improved last month, both in consumption and wholesale.

At the end of the week, a report will show what level of inflation American households expect in the future. The Federal Reserve is closely monitoring this measure, hoping to avoid a vicious cycle in which expectations of high inflation lead to behavior that causes even higher inflation.

On Wednesday, the Federal Reserve will announce its latest interest rate decision. Virtually no one then expects it to change its main interest rate. But policymakers will release their latest forecasts on the future path of interest rates and the economy.

The last time Fed officials released such projections, in March, they indicated that the typical member still expected about three interest rate cuts in 2024. That forecast will almost certainly come true this time -this. Wall Street traders are largely betting on just one or two rate cuts in 2024, according to CME Group data.

On the bond market, the yield on 10-year Treasury bills rose from 4.43% Friday evening to 4.48%. The two-year yield, which more closely tracks Fed expectations, slipped to 4.87% from 4.89%.

On foreign stock exchanges, the French CAC 40 index fell 1.4% after French President Emmanuel Macron dissolved the National Assembly following the surprising results of the elections to the European Parliament. Far-right parties have gained ground and the value of the euro has fallen. Other indices in Europe also fell, but not as much as France's.

Asian markets finished mixed. Tokyo's Nikkei 225 index rose 0.9% after the release of government data. Japan's economy declined less in the first three months of the year than previously thought. South Korea's Kospi fell 0.8%, while markets were closed in Shanghai, Hong Kong and Australia for holidays.

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AP writers Matt Ott and Zimo Zhong contributed.