NEW YORK — Stocks are mixed on Wall Street Thursday as reports painted a split U.S. economy. The job market remains remarkably solid, but manufacturing is weakening and shoppers of all kinds are feeling more pressure.
The S&P 500 was 0.1 percent higher in morning trading after eking out a third straight winning month.
The Dow Jones Industrial Average was down 63 points, or 0.2 percent, at 32,845, as of 10:35 a.m. Eastern time, while the Nasdaq composite was 0.1 percent higher.
One positive for the market came late Wednesday when the House of Representatives approved a deal to prevent a possibly catastrophic default on the U.S. government’s debt.
But that was what Wall Street expected, and only a trip-up for the deal before it gets signed by President Joe Biden would likely cause big waves for stocks.
Markets are more concerned about whether the economy will fall into a recession before inflation recedes enough to convince the Federal Reserve to take it easier on interest rates.
Reports on Thursday gave a clouded view. One said that fewer workers applied for unemployment benefits last week than expected, while another suggested employers increased their payrolls last month by more than forecast.
Both those are good news for workers and for the overall economy, which has been slowing under the weight of much higher interest rates. But a strong job market could also keep pressure up on inflation, pushing the Fed to keep rates high.
On the flip side, manufacturing is continuing to get hit hard, in part by higher interest rates.
A report from the Institute for Supply Management said manufacturing shrank for a seventh straight month in May. The contraction was worse than both the prior month and what economists expected.
Following the reports, traders were largely betting on the Fed to hold rates steady at its next meeting in two weeks. That would be the first time in more than a year that it hasn’t hiked rates, and it’s something a Fed official a day earlier hinted may happen.
But traders are split on whether the Fed will follow up a possible pause with another hike to rates at its next meeting in July. High rates work to lower inflation by slowing the economy and hurting prices for stocks and other investments.
So far, the economy has held up despite such worries because of a still-strong job market and resilient spending by consumers. But reports from several retailers are showing shoppers feeling more pressure, all the way across the income spectrum.
Dollar General dropped 18 percent after it reported weaker profit and revenue for the latest quarter than analysts expected. It said the economic environment has been more challenging than it expected, and it cut its financial forecasts for the full year. It tends to cater to lower income households.
Macy’s, which also owns Bloomingdale’s stores, fell 3.5 percent after it slashed expectations for the year and fell short on sales and profit in the first quarter. It said shoppers began to pull back starting in March.
That trend seems to be afflicting retailers across the spectrum.
Nordstrom slipped 0.5 percent despite reporting a surprise profit for the latest quarter. It said its customers, which include many upper-income households, were also feeling pressure.
“With the high-end customer, I guess we would say they’re pretty resilient, but they’re also cautious,” CEO Erik Nordstrom told analysts in a conference call late Wednesday. “And we’re seeing that really across the board, that caution.”
On the winning end was Hormel Foods, which rose 6.8 percent after reporting stronger profit for the latest quarter than expected. Its brands include Skippy, Spam and Applegate meats.
Despite all the worries about interest rates and the economy, the U.S. stock market has held up this year. But that’s largely because of gains for a small handful of big tech stocks and others swept up in a building frenzy around AI.
That’s pushed the S&P 500 to a gain this year even when the majority of stocks have fallen.
Some of that enthusiasm cooled after C3.ai gave a forecast for revenue this upcoming fiscal year that failed to wow Wall Street like Nvidia’s did last week. C3.ai said it expects to make between $295 million and $320 million, versus analysts’ expectations of roughly $317 million.
C3.ai tumbled 15.7 percent, though it’s still up more than 200 percent so far this year. Nvidia rose 2.7 percent.
In the bond market, the yield on the 10-year Treasury fell to 3.61 percent from 3.65 percent late Wednesday. It helps set rates for mortgages and other loans that influence the economy’s strength.
The two-year Treasury yield, which moves more on expectations for the Fed, fell to 4.38 percent from 4.40 percent.
In Europe, stock indexes were modestly higher after a report showed that inflation there took a positive turn, falling to 6.1 percent, though prices are still squeezing shoppers who are yet to see real relief in what they pay for food and other necessities. Germany’s DAX was 0.7 percent higher, while France’s CAC 40 rose 0.2 percent.
Asian markets were mixed as worries remain about a weaker-than-expected recovery for the Chinese economy.
Hong Kong’s Hang Seng slipped 0.1 percent, while Japan’s Nikkei 225 rose 0.8 percent.—AP