Asian shares mostly lower, Japan’s Nikkei 225 falls 2.5%

NEW YORK (AP) — U.S. stocks are slipping Monday as Wall Street prepares for a report on inflation that could show how realistic its hopes for easier interest rates are.

The S&P 500 was 0.5% lower in morning trading, coming off just its third losing week in the last 19. But it’s still near its all-time high set Thursday, buoyed by expectations that cuts to interest rates are coming this year and by signals that the economy remains remarkably resilient.

The Dow Jones Industrial Average was down 212 points, or 0.5%, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 0.4% lower.

Tuesday’s report on prices at the consumer level could show inflation remained at 3.1% in February, if economists’ forecasts are correct.

A month ago, a hotter-than-expected report on inflation at the consumer level sent financial markets spinning because it scrambled bets for when the Federal Reserve will start cutting rates. Stocks have already run higher and Treasury yields have already eased in the bond market on expectations that such cuts are coming.

But the trend for inflation has been mostly downward, cooling toward the Fed’s 2% target from its peak above 9%. Fed Chair Jerome Powell Jerome Powell said last week the Fed is “not far” from getting enough confidence about inflation to begin cutting rates. Cuts to the Fed’s main interest rate from its highest level since 2001 would relax pressure on the economy and financial system, while goosing investment prices.

The widespread expectation among traders is that the Fed will begin cutting rates in June.

It’s such expectations that have been behind some of the U.S. stock market’s huge run since late October, according to Michael Wilson and other strategists at Morgan Stanley. From here, though, “the burden is now likely on earnings/fundamentals to show more material improvement” for the rally to continue.

Expectations for easier interest rates have helped the price of gold also rally to a record. When bonds pay less in in interest, investors lose out on less income by owning gold instead. Gold ticked up by 0.1%,Monday to $2,187 per ounce.

Bitcoin, which proponents sometimes pitch as “digital gold,” also rallied to another record. It rose above $72,000 after sitting below $17,000 at the start of last year. It’s more than bounced back from its prior prior peak of nearly $69,000.

A slew of new exchange-traded funds that make investing in bitcoin easier has also helped to drive interest in the cryptocurrency. Coinbase, which offers custodial services for those ETFs, rose 3.3%.

On the losing end was Nvidia, which slipped 0.4%. It’s on an uncharacteristic losing streak after falling 5.5% on Friday for its worst day since May. Nvidia is still up more than 70% this year after more than tripling last year amid a frenzy on Wall Street around artificial-intelligence technology.

The rally has caused Nvidia to swell in size, and it’s become the third-largest stock on Wall Street. That gives its stock movements outsized sway on the S&P 500, and it’s been getting criticism that its stock ran too high, too fast.

Natural-gas producer EQT fell 8.5% for the biggest drop in the S&P 500 after it said it will buy Equitrans Midstream and its gas transmission and storage systems in an all-stock deal that values the combined company at $35 billion. Equitrans Midstream rose 1.9%.

Elsewhere on Wall Street, Reddit said it’s looking to raise up to nearly $750 million through the sale of stock to investors on an exchange for the first time. The social media company expects its stock to trade under the “RDDT” ticker symbol.

In the bond market, yields were holding relatively steady. The yield on the 10-year Treasury inched up to 4.09% from 4.08% late Friday.

In stock markets abroad, indexes were mostly lower across much of Europe and Asia.

Japan’s Nikkei 225 tumbled 2.2%. The government there said its economy may have actually grown slightly in the last three months of 2023, better than the contraction it had earlier said. That would mean its economy is not in a recession.

The Nikkei 225 has been setting records recently after surpassing its peak from 1989, boosted in part by extremely easy interest rates and other policies meant to support Japan’s economy.

Chinese stocks rose, with indexes climbing 0.7% in Shanghai and 1.4% in Hong Kong. China’s National People’s Congress concluded with a near unanimous show of support for the decisions set by top leaders of the ruling Communist Party.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.