Wall Street drifts around its records as its relentless rally takes a breath

NEW YORK (AP) — U.S. stocks are drifting on Monday as Wall Street lets off the accelerator for its seemingly relentless rally.

The S&P 500 dipped 0.1%. The Dow Jones Industrial Average was down 103 points, or 0.2%, as of 9:57 a.m. Eastern time, and the Nasdaq composite was virtually unchanged. All three set their latest all-time highs on Friday.

It’s only a modest pullback when compared with the surge that stocks have enjoyed hitting a bottom in April. Driving the market have been hopes that President Donald Trump’s tariffs won’t derail global trade and that the Federal Reserve will deliver several cuts to interest rates that will boost the U.S. economy.

The Fed made its first cut of the year to rates last week, and officials indicated they could deliver more through the end of this year and into next.

“Every time the market seems to be running out of momentum, it fools most of us by pushing to higher heights,” said Jay Woods, chief market strategist at Freedom Capital Markets.

But the U.S. stock market still faces challenges. Chief among them is if the Fed does not cut interest rates as many times as investors expect. The Fed is wary because lower rates can give inflation more fuel, and inflation has stubbornly remained above its 2% target. An update on Friday will show how much prices are rising for U.S. households based on the Fed's preferred measure of inflation, and economists expect it to show a slight acceleration for last month.

Plus, stocks already look too expensive to many professional investors after their prices surged so much.

Coinbase Global fell to one of Wall Street’s bigger losses on Monday with a drop of 2.2%. But it’s still up nearly 35% for the year so far thanks to interest for cryptocurrencies, whose prices have soared to records on expectations for more cuts to interest rates.

Some of the market’s sharpest action was among companies agreeing to buy one another.

Pfizer said it would buy Metsera and its pipeline of medicines to potentially treat obesity in a deal initially valuing it at $4.9 billion. The price tag could go up sharply, by nearly 50%, if Metsera’s candidates win approval from federal regulators and achieve other milestones.

Metsera’s stock jumped 61.9%, and Pfizer’s rose 3.1%.

ODP, which runs Office Depot and Office Max, leaped 33.1% after Atlas Holdings agreed to buy it in a deal valued at roughly $1 billion.

Anywhere Real Estate soared 55.6% after Compass said it would buy the company behind the Coldwell Banker and Corcoran brands in an all-stock deal. They said the combined company is expected to have a total enterprise value of roughly $10 billion, including debt. Compass shares fell 8.5%.

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

Japan’s Nikkei 225 jumped 1%, and Hong Kong’s Hang Seng fell 0.8% for two of the world’s bigger moves.

In the bond market, Treasury yields held relatively steady. The yield on the 10-year Treasury edged down to 4.13% from 4.14% on Friday.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.