US stocks trade cautiously ahead CPI report, Fed decision

The Dow was flat on Monday as investors remained cautious ahead of this week’s Federal Reserve meeting and a critical inflation data that could provide insight into the central bank’s policy-easing path. In contrast, the S&P 500 and the Nasdaq saw increases.

The Nasdaq traded little higher as gains in firms like Microsoft, Amazon.com, and Broadcom offset the S&P 500’s early dips. These shares increased by 0.8% to 2.5 percent.

This week’s key events include Wednesday’s conclusion of the Fed’s two-day policy meeting and the Consumer Price Index inflation report for May. The central bank is widely likely to keep interest rates unchanged when it releases fresh economic and policy projections.

Markets dialed back expectations for rate cuts in September after Friday’s bumper jobs data for May, with the odds of a reduction at 50%. Expectations had risen as high as 69% last week. However, unemployment had ticked higher and household surveys showed signs of economic distress. We’re probably going to see a little bit of volatility.

The “Choose your own adventure” stance was already established by the employment report, and the looming CPI report this week may have caused some further confusion. Chipmaker Nvidia saw a 1.1% increase in choppy trading following a 10-for-one stock split that took effect after Friday’s market close, sparking speculation about the company’s potential inclusion in the blue-chip Dow.

The financial sector underperformed, with regional lender Huntington Bancshares suffering a 6.1% loss after the business predicted a higher fall in annual interest income than anticipated.

The Dow Jones Industrial Average, was down 19.65 points, or 0.05%, at 38,779.34, the S&P 500, was up 7.94 points, or 0.15%, at 5,354.93, and the Nasdaq Composite, was up 57.16 points, or 0.33%, at 17,190.29.

Apple slipped 0.8% ahead of the iPhone maker’s annual developer conference for updates on how it is integrating artificial intelligence into its offerings. Southwest Airlines, jumped 8.6% after activist investor Elliott Investment Management disclosed it has built up a $1.9 billion position in the company.

CrowdStrike, KKR & Co, and GoDaddy rose between 2.2% and 10.5% after S&P Dow Jones Indices said the companies would be included in the S&P 500, as of June 24. Diamond Offshore Drilling, added 10.3% after oilfield services firm Noble, said it would buy the smaller rival in a $1.59 billion deal.

Meanwhile, videogame retailer GameStop, reversed early gains to slump 12.7 %, after losing nearly 40% on Friday after stock influencer Keith Gill’s return to YouTube failed to offset its announcement of a share sale.

Declining issues outnumbered advancers for a 1.25-to-1 ratio on the NYSE and for a 1.20-to-1 ratio on the Nasdaq. The S&P index recorded 12 new 52-week highs and five new lows, while the Nasdaq recorded 42 new highs and 142 new lows.