Stock market today: Wall Street stalls as indexes drift near records

NEW YORK (AP) — U.S. stock indexes are drifting on Thursday following some potentially discouraging data on the economy.

The S&P 500 slipped 0.2% in early trading and was on track for its third loss in the last four days. That would count as a stumble amid a big rally that’s carried it toward the close of one of its best years of the millennium.

The Dow Jones Industrial Average was up by 23 points, or 0.1%, as of 9:40 a.m. Eastern time, and the Nasdaq composite fell 0.4% from its record set the day before.

A report earlier in the morning said more U.S. workers applied for unemployment benefits last week than expected. A separate update, meanwhile, showed that inflation at the wholesale level, before it reaches U.S. consumers, was hotter last month than economists expected.

Neither report points to imminent disaster, but they tug at one of the hopes that’s driven the S&P 500 to 57 all-time highs so far this year: Inflation is slowing enough to convince the Federal Reserve to keep cutting interest rates, while the economy is remaining solid enough to stay out of a recession.

Of the two reports, the weaker update on the job market may be the bigger deal for the market, according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley. A surge in egg prices may have been behind the worse-than-expected inflation numbers.

“One week doesn’t negate what has been a relatively steady stream of solid labor market data, but the Fed is primed to be sensitive to any signs of a softening jobs picture,” he said.

Traders see it as a near-certainty that the Fed will cut its main interest rate at its meeting next week. If they’re correct, it would be a third straight cut by the Fed after it began lowering rates in September from a two-decade high. It’s hoping to support a slowing job market after getting inflation nearly all the way down to its 2% target.

Lower rates would give a boost to the economy and to prices for investments, but they could also provide more fuel for inflation.

A cut next week would have the Fed following other central banks, which eased rates on Thursday. The European Central Bank cut rates by a quarter of a percentage point, as many investors expected, and the Swiss National Bank cut its policy rate by a steeper half of a percentage point.

Following its decision, Switzerland’s central bank pointed to uncertainty about how U.S. President-elect Donald Trump’s victory will affect economic policies, as well as about where politics in Europe is heading.

On Wall Street, Adobe fell 11.4% despite reporting stronger profit for the latest quarter than analysts expected. The company gave forecasts for profit and revenue in its upcoming fiscal year that fell a bit shy of analysts’.

Kroger rose 2.9% after saying it would get back to buying back its own stock after abandoning its attempt to merge with Albertsons. Kroger’s board approved a program to repurchase up to $7.5 billion of its stock, replacing an existing $1 billion authorization.

In stock markets abroad, European indexes were holding relatively steady following the European Central Bank’s cut to rates.

Asian markets were stronger. Indexes rose 1.2% in Hong Kong and 0.8% in Shanghai as leaders met in Beijing to set economic plans and targets for the coming year.

South Korea’s Kospi rose 1.6% for its third straight gain of at least 1%, as it pulls back following last week’s political turmoil where its president briefly declared martial law.

In the bond market, the 10-year U.S. Treasury yield rose to 4.29% from 4.27% late Wednesday. The two-year Treasury yield, which more closely tracks expectations for the Fed, edged down to 4.15% from 4.16%.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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