Stock market today: Wall Street holds relatively steady ahead of big tests coming later in the week

NEW YORK (AP) — U.S. stocks are holding relatively steady Monday, as markets around the world stabilize following a wild week of extreme swings.

The S&P 500 was up 0.3% in morning trading after flipping earlier between small gains and losses. The Dow Jones Industrial Average was down 30 points, or 0.1%, as of 10:50 a.m. Eastern time, and the Nasdaq composite was 0.7% higher.

Many European and Asian stock markets were also relatively quiet. That’s a notable turn after last week kicked off with the worst day for Japanese stocks since the Black Monday crash of 1987, only to give way to the best day since 2022 for U.S. stocks.

The value of the Japanese yen eased on Monday, calming some more after its earlier surge sent shockwaves through markets. The sharp rise for the Japanese yen following a hike to interest rates by the Bank of Japan forced many hedge funds and other investors to abandon a popular trade all at once, where they had borrowed yen at cheap rates to invest elsewhere. The forced selling reverberated around the world.

A promise last week by a top Bank of Japan official not to raise rates further as long as markets are “unstable” has helped calm the market. But other worries were also behind last week’s turbulence for markets, including concerns about a slowing U.S. economy.

This upcoming week will feature reports on inflation and how much U.S. shoppers are spending at retailers. The best-case scenario for Wall Street would be data showing a continued slowdown in inflation, combined with strengthening U.S. retail sales.

Such a combination would indicate the Federal Reserve is successfully walking the tightrope it’s been attempting since it began hiking interest rates sharply in 2022: It wants the U.S. economy to slow by enough to snuff out high inflation, but not so much that it causes a recession.

A string of worse-than-expected economic data recently has raised worries the Fed may be leaning too far to one side on the tightrope after keeping its main interest rate at a two-decade high. The lowlight was a report earlier in the month showing hiring by U.S. employers weakened by far more last month than expected.

For the inflation data, meanwhile, strategists at Bank of America led by Ohsung Kwon say a hotter-than-expected reading would be a bigger surprise for the market than a cooler-than-expected figure. That could lead to tie “a major downside event” for the market.

The Fed does not have an easy way to fix a weakening economy combined with worsening inflation, a phenomenon that’s called “stagflation.” The central bank could lower interest rates, which would give the U.S. economy an upward push but also threaten to worsen inflation. Or it could continue to keep its rate high. That would put downward pressure on inflation but also inflict more pain on the economy.

Of course, the economy is U.S. still growing, and many economists see a recession as unlikely. But worries about it have nonetheless been putting downward pressure on Treasury yields in the bond market.

They were holding relatively steady on Monday ahead of the upcoming data reports. The yield on the 10-year Treasury was holding at 3.94%, where it was late Friday. The two-year Treasury yield, which more closely tracks expectations for Fed action, edged down to 4.05% from 4.06%.

On Wall Street, KeyCorp jumped 13% after the regional bank announced a $2.8 billion investment from the Bank of Nova Scotia. The Cleveland bank said the cash influx will allow it to drive further growth in its investment banking and wealth management businesses.

On the losing end was Hawaiian Electric, which reported weaker results for the spring than analysts expected. The company also said it’s not sure it will be able to last at least another year in business unless it can find financing to help pay the estimated $1.71 billion in liabilities it has built up related to the Maui windstorm and wildfire. Its stock sank 15.5%.

Several big companies will also report their latest earnings results later in the week, including Walmart and Home Depot. Most big U.S. companies have been reporting better profits for the spring than analysts expected, but pressure is on retailers amid worries about how spenders at the lower end of the income spectrum are faring.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.