NEW YORK (AP) — U.S. stocks drifted to a mixed close near their record heights. The S&P 500 ended little changed Monday and is less than 1% below its record set at the end of March. The Dow Jones Industrial Average slipped 0.2%, and the Nasdaq composite edged up 0.3%. Stocks have rallied this month on revived hopes that inflation may ease enough to convince the Federal Reserve to cut its main interest rate later this year. A key test will arrive Wednesday, when the government offers an update on inflation. GameStop and other meme stocks soared. Treasury yields eased in the bond market.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stocks are drifting around the edge of their record heights on Monday.

The S&P 500 was edging 0.1% lower in afternoon trading and is less than 1% below its record set at the end of March. The Dow Jones Industrial Average was down 72 points, or 0.2%, as of 1:59 p.m. Eastern time, and the Nasdaq composite was 0.3% higher.

Stocks have rallied this month following a rough April on revived hopes that inflation may ease enough to convince the Federal Reserve to cut its main interest rate later this year. A key test for those hopes will arrive Wednesday, when the U.S. government offers the latest monthly update on inflation that households are feeling across the country.

Other reports this week include updates on inflation that wholesalers are seeing and sales at U.S. retailers. They could show whether fears are warranted about a worst-case scenario for the country, where stubbornly high inflation forms a devastating combination with a stagnating economy.

Hopes have climbed that the economy can avoid what’s called “stagflation” and hit the bull’s eye where it cools enough to get inflation under control but stays sturdy enough to avoid a bad recession. Federal Reserve Chair Jerome Powell also gave financial markets comfort when he recently said the U.S. central bank remains closer to cutting rates than to raising them, even if inflation has remained hotter than forecast so far this year.

The Fed has been holding its main interest rate at the highest level in more than two decades in hopes of slowing down the overall economy to force inflation lower.

Some critics are saying the Fed may end up having to delay rate cuts for longer than traders expect because of continued pressure on inflation. The goal for inflation that "the Fed seeks is a pipe dream,” according to Barry Bannister, a managing director at Stifel.

He says all the downward pressure on inflation that an economy usually gets from a recession has already been wrung out following the U.S. economic slowdown from 2022 into 2023, and he expects the next big move of 500 points for the S&P 500 to be downward.

In the meantime, a stream of stronger-than-expected reports on U.S. corporate profits has also helped to support the market. Companies in the S&P 500 are on track to report growth of 5.4% for their earnings per share in the first three months of the year versus a year earlier, according to FactSet. That would be the best growth in nearly two years.

Much of the growth, once again, has come from the big “Magnificent Seven” companies that accounted for most of the stock market’s returns last year, including Alphabet, Meta Platforms and Microsoft. But more companies across the index than usual have been topping analysts’ forecasts for profit during the first quarter.

Earnings season has nearly finished, and reports are already in for more than 90% of companies in the S&P 500. But this upcoming week includes Walmart and several other big names. They could offer more detail about how U.S. households are faring.

Worries have been rising about cracks showing in spending by U.S. consumers, which has been one of the bedrocks keeping the economy out of a recession. Lower-income households appear to be under particularly heavy strain because of still-high inflation and higher credit-card rates.

On Wall Street, Incyte climbed 8.3% after saying it would buy back up to $2 billion of its stock. The biopharmaceutical company is the latest to say it will return cash to shareholders through such purchases, which can goose the amount of earnings that each remaining share is entitled to.

GameStop soared 76.5% in a swing reminiscent of its maniacal moves a little over three years ago. That’s when hordes of smaller-pocketed and novice investors sent the stock’s price way above what many financial analysts and professional investors called rational.

One believer in particular, who goes by the nickname Roaring Kitty, helped lead the charge, and a post on a social media account linked to him was stirring more adrenaline. Within the first 70 minutes of trading, trading of GameStop's stock was temporarily halted nine times because its price was swinging so severely.

In the bond market, Treasury yields were easing. The yield on the 10-year Treasury slipped to 4.47% from 4.50% late Friday.

In stock markets abroad, Chinese indexes were mixed. The Biden administration is expected to announce this week that it will raise tariffs on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China, according to people familiar with the plan. Tariffs on electric vehicles, in particular, could quadruple to 100%.

Indexes slipped 0.2% in Shanghai and rose 0.8% in Hong Kong. Elsewhere in Asia and in Europe, they were mostly modestly lower.

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AP Writer Zimo Zhong contributed.

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