Dow, S&P 500 Slip; Inflation, Credit Downgrade Worries Rattle Wall Street

Markets are taking a bit of a bit of a breather ahead of Tuesday’s inflation data.

Major stock indexes opened lower but then clawed back declines. Treasury yields rose in early trading but have also reversed.

Stocks are looking to maintain momentum following a two-week rally during which the S&P 500 has gained 7.2%, rising in nine of 10 sessions.

This week’s big markets event: Tuesday’s inflation reading, which is expected to show U.S. consumer-price growth slowed last month. Retail-sales data out Wednesday will shape GDP forecasts. Presidents Biden and Xi are gearing up to meet in San Francisco.

Stocks were quiet. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were all little changed. The Dow was faring the best of the three, partly thanks to Boeing, which was up more than 3%.

Investors are positioning for a year-end rally, options-market data suggests, after the Federal Reserve hinted it probably won’t raise interest rates again in 2023.

Treasury yields retraced early morning gains. Yields had edged up late Friday after Moody’s Investors Service cut its outlook for the U.S. government’s credit rating to negative. Many investors have cited swelling deficits as a worry of late.

Oil prices wavered, with U.S. crude hovering around $78 a barrel. Weakening demand has pulled down crude prices recently, helping damp inflation.

Overseas markets were mixed. Travel-and-leisure stocks boosted the Stoxx Europe 600. Japanese and mainland Chinese indexes were little changed.