Financial Markets                      05/14 15:42

   

   NEW YORK (AP) -- Stocks rose on Wall Street Tuesday, pushing the Nasdaq 
composite to another record and leaving the S&P 500 sitting just shy of its own 
all-time high.

   The late gains closed out a mostly wobbly day of trading as investors 
reviewed a mixed report on inflation and await an even more important inflation 
update on Wednesday. Stocks have been generally gaining ground in May following 
a dismal April.

   The S&P 500 index rose 25.26 points, or 0.5%, to 5,246.68. It is sitting 
about 0.1% below its record high set in late March. The Dow Jones Industrial 
Average rose 126.60 points, or 0.3%, to 39,558.11.

   The Nasdaq composite, which is heavily influenced by technology stocks, 
jumped 122.94 points, or 0.8%, to 16,511.18, setting a record high. The tech 
sector has been a driving force for much of the broader markets gains this year.

   Several "meme" stocks, including GameStop and AMC Entertainment, raced 
higher in a reprise of the social-media driven frenzy of three years ago. 
GameStop jumped 60.1% and AMC rose 32%. Both stocks gave back much of their 
gains from earlier in the day.

   An update on inflation showed that prices remain stubbornly high at the 
wholesale level, before many price changes are passed along to consumers. The 
latest producer price index showed that inflation rose sharply in April. The 
report also included a revision lower for the March reading. The report is the 
first of two big inflation updates this week that are being closely watched by 
Wall Street.

   "Inflation pressures in the U.S economy are still substantial and the 
momentum that built up over the last few years is still rolling along," said 
Bill Adams, chief economist for Comerica Bank. "At the margin the Fed will see 
the April PPI report as another reason to slow-roll interest rate cuts."

   Bond yields edged lower. The yield on the 10-year Treasury slipped to 4.45% 
from 4.49% late Monday. The yield on the two-year Treasury, which more closely 
tracks expectations for actions by the Federal Reserve, fell to 4.82% from 
4.86%.

   The bigger test for markets comes Wednesday, when the U.S. releases its 
monthly update on consumer prices, or inflation faced by households. Economists 
expect the consumer price index to ease to 3.4% in April on a year-over-year 
basis. The rate of inflation has been ticking higher in 2024, raising concerns 
that the Fed could have a hard time taming inflation to the central bank's goal 
of 2%.

   Investors have been curtailing their expectations for the speed and 
frequency of interest rate cuts this year as inflation remains hotter than 
expected. Traders are betting on one or two rate cuts this year, according to 
data from CME Group.

   Wall Street is still hoping the Fed can pull off its "soft landing," where 
high interest rates work to cool inflation without slowing the economy into a 
recession. The economy remains strong, but consumers might be showing signs of 
fatigue under the weight of stubborn inflation. Economists expect a retail 
sales report on Wednesday to show that consumer spending softened in April, 
just as it has over the last several months.

   The latest round of earnings reports and company forecasts from retailers 
also show that consumers are struggling. Lower-income households are under a 
particularly heavy strain. Retail giant Walmart will report its latest 
financial results on Thursday, giving investors more insight into consumer 
spending habits.

   Fed Chair Jerome Powell, at a panel discussion in Amsterdam on Tuesday, 
reaffirmed that the central bank won't likely raise its key interest rate to 
respond to stubborn inflation. He also said that his confidence that inflation 
will ease is "not as high as it was" because price increases have been 
persistently hot in the first three months of this year.

   Earnings have been a bright spot for markets, helping to support gains for 
major indexes in May after a rough April. Companies in the S&P 500 are mostly 
finished with their latest results, which show a 5.3% gain in earnings overall.

   Stocks were mostly higher in Europe and mixed in Asia. Chinese markets 
slipped following U.S. plans to raise tariffs on imports from China.

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