Stocks slip on Wall Street after another report on inflation that was worse than expected

U.S. stocks slipped Thursday after a mixed batch of economic data seemed to drive the final nail into hopes that easier interest rates may arrive very soon.

The Standard & Poor’s 500 fell 14.83 points, or 0.3%, to 5,150.48, though it’s still close to its all-time high set Tuesday. The Dow Jones industrial average sank 137.66 points, or 0.4%, to 38,905.66, and the Nasdaq composite lost 49.24 points, or 0.3%, to close at 16,128.53.

The moves were more decisive in the bond market, where Treasury yields rose after a report showed inflation was a touch hotter at the wholesale level last month than economists expected. It’s the latest in a string of data on inflation that’s been worse than forecast, which has kept the door closed on hopes that the Federal Reserve could start cutting interest rates at its meeting next week.

But other reports released Thursday also showed some softening in the economy, which kept alive hopes that the long-term trend for inflation remains downward.

Traders still largely expect the Fed to begin cutting rates in June, according to data from CME Group. The Fed’s main rate is at its highest level since 2001 in an effort to down inflation, and cuts would relieve pressure on the economy and financial system.

The question hanging over Wall Street is how much the latest signals of potentially stubborn inflation will ultimately delay rate cuts. That in turn could damage the huge run U.S. stocks have been on since late October, rising in 16 of the last 19 weeks.

Traders on Thursday pushed some bets for the first rate cut into July from June.

The day’s mix of data could push the Federal Reserve to signal it foresees only two cuts to rates this year, down from three, according to Brian Jacobsen, chief economist at Annex Wealth Management.

Fed officials will give their latest forecasts for where they see interest rates heading this year on Wednesday, after their latest policy meeting.

Among the data they’ll mull over is a report from Thursday that said shoppers spent less at U.S. retailers last month than economists expected. Such data drag on the overall economy but could also remove upward pressure on inflation.

The government also said retail sales were weaker in January than earlier thought. Strong spending by U.S. households has been one of the linchpins keeping the economy out of a recession despite high interest rates.

A separate report said fewer U.S. workers applied for unemployment benefits last week than expected. That’s good news for workers generally. But too much strength in the job market, which has remained remarkably resilient, could add upward pressure on inflation.

The mix of data sent the yield on the 10-year Treasury up to 4.28% from 4.19% late Wednesday. The two-year yield, which more closely tracks expectations for the Fed, rose to 4.69% from 4.63%.

On Wall Street, Dollar General swung sharply despite reporting stronger profit and revenue for the latest quarter than expected. Its stock fell 5.1% after being up more than 6% earlier.

Dollar General executives said inflation is pushing customers to make trade-offs in the aisles, away from nonessentials and name brands. It’s also removing self-checkout from more than 300 of its stores that are experiencing high losses of inventories.

A day earlier, rival Dollar Tree tumbled after reporting weaker-than-expected results and saying it would close hundreds of its Family Dollar stores.

Dick’s Sporting Goods jumped 15.5% after it reported stronger profit for the latest quarter than expected and increased its dividend.

Robinhood Markets gained 5.2% as near-record stock and crypto prices drove strong growth in trading activity among its customers last month.

U.S. Steel sank 6.4% after President Biden came out in opposition of the planned sale of the company to Nippon Steel of Japan.

Nippon Steel announced in December that it planned to buy the Pittsburgh-based steel producer for $14.1 billion in cash, raising concerns about what the transaction could mean for unionized workers, supply chains and U.S. national security.

Shares of Anheuser-Busch InBev trading in the United States slumped 5.5% after Altria said it was selling a portion of its stake in the maker of Budweiser.

Home builder Lennar sank 7.6% despite reporting stronger growth in profit than expected, as its revenue fell short of analysts’ forecasts.

In stock markets abroad, indexes were mixed across Europe and Asia.

Japan’s Nikkei 225 rose 0.3% amid speculation that the Bank of Japan may soon end its policy to keep interest rates below zero.

Stan Choe writes for the Associated Press. AP writers Yuri Kageyama and Matt Ott contributed to this report.