Stock market today: Wall Street drifts around its record highs

NEW YORK (AP) — U.S. stock indexes are hanging near their all-time highs on Monday.

The S&P 500 was 0.2% higher in afternoon trading, coming off its fifth winning week in the last six, and flitting around its record set on Thursday. The Dow Jones Industrial Average rose 75 points, or 0.2%, from its own record set on Friday. The Nasdaq composite was 0.2% higher, as of 2:31 p.m. Eastern time.

Tesla led the way with a gain of 4.6%. The maker of electric vehicles has clawed back all its sharp losses from earlier in the year. It was down as much as 42% at one point in April, when it was cutting prices on its cars to boost flaccid sales.

Financial markets have been romping higher after the Federal Reserve last week cut its main interest rate for the first time in more than four years by an unusually large amount. The hope is that as it continues to cut interest rates, the boost given to the U.S. economy through lower rates for car loans, mortgages and other borrowing will help it avoid a recession.

But some critics say the Federal Reserve may be moving too late, with the job market already slowing, and call stock prices too high.

A report on Monday morning suggested U.S. business activity is not growing as quickly as economists expected, mostly because of a continued downturn in manufacturing. The preliminary report from S&P Global said U.S. manufacturing shrank more severely in September than in August and hit a 15-month low. It's been one of the parts of the economy hurt most by high interest rates.

The overall figures suggest a U.S. economy that's still growing at a healthy rate, according to Chris Williamson, chief business economist at S&P Global Market Intelligence. "But there are some warning lights flashing, notably in terms of the dependence on the service sector for growth, as manufacturing remained in decline, and the worrying drop in business confidence.”

He also pointed to subdued activity among businesses given uncertainty heading into the U.S. elections in November.

Several reports coming this week could offer more context about where the U.S. economy stands. One on Thursday will offer the final reading for the U.S. economy’s growth in the spring, and another on Friday will give a look at how much U.S. consumers are spending.

Such economic reports, particularly on the job market, are taking top priority on Wall Street because the main fear is now a slowdown in the job market. It’s a notable shift from prior years, when the most attention was on anything related to inflation.

But now that inflation has come down substantially from its peak two summers ago, the Fed has shifted gears.

It feels less need to keep rates high in order to slow the economy enough to stifle inflation, hence last week’s cut of half a percentage point to its main interest rate. And it feels more pressure to prop up the job market and overall economy, hence its plans to keep cutting interest rates this year and next.

In the bond market, the yield on the 10-year Treasury held steady at 3.74% from late Friday. The yield on the two-year Treasury, which moves more with expectations for Fed action, fell to 3.57% from 3.60% late Friday.

In stock markets abroad, indexes held mostly steady in Europe after preliminary data suggested business activity in the euro zone is weaker than economists expected. Germany’s DAX rose 0.7%, while the French CAC 40 rose 0.1%.

In Asia, movements for indexes were also muted. Indexes rose 0.4% in Shanghai but slipped 0.1% in Hong Kong after China’s central bank lowered its 14-day reverse repurchase rate on Monday. That followed its decision to keep key lending rates unchanged last week, when investors had been expecting a cut.

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AP Writer Zimo Zhong contributed.