Stocks edged lower in afternoon trading on Wall Street Wednesday, a day after the S&P 500 ended a six-day winning streak.
A report showing that inflation remained tame last month was encouraging for investors because it suggested the U.S. economy is in a strong position to receive more stimulus without overheating.
The yield on the 10-year Treasury note fell to 1.14% from 1.15% late Wednesday. It was as a high as 1.20% earlier this week.
The S&P 500 index was down 0.2% as of 12:49 p.m. Eastern. It was up as much as 0.5% in the early going. The Dow Jones Industrial Average rose less than 0.1% to 31,378 and the Nasdaq was down 0.3%. All three are still trading near the record highs they reached in recent days.
Nearly 60% of the companies in the S&P 500 were making making gains, but a slide in technology stocks and companies that provide consumer services and products weighed down the index.
“Generally, the market has seen a very favorable backdrop and that likely remains the case going forward,” said Sal Bruno, chief investment officer at IndexIQ. “Inflation remains benign and there’s still going to be a pretty big stimulus package going forward.”
The Labor Department said Wednesday that U.S. consumer prices rose 0.3% in January, led by a surge in energy. Even though the gain was the biggest monthly increase since July, inflation over the past year has remained relatively low. Over the past year, inflation is up a modest 1.4%. Core inflation, which excludes volatile food and energy costs, is also up 1.4% with core prices unchanged in January.
Investors have started watching inflation metrics more closely as Democrats in Congress prepare to inject $1.9 trillion of stimulus into the economy. U.S. businesses are starting to reopen and millions of Americans are now vaccinated, meaning there could be a surge of economic activity and therefore potential inflation. Before Wednesday’s report, Treasury yields had been climbing steadily for weeks, which is typically a sign that investors expect both the economy to get better and for inflation to increase.
“Consumer price inflation remains very tame,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.
Twitter and Under Armour jumped 7.8% and 8.5% respectively after delivering quarterly report cards that were much better than analysts were expecting. Twitter became the latest tech giant to report strong results despite the pandemic.
Energy companies were holding up well and making some of the broadest gains as oil prices edged higher, adding to a roughly 12% gain so far in February. Devon Energy rose 4.3% and Hess gained 3%.
AP Economics Writer Martin Crutsinger contributed to this report from Washington.