NEW YORK – US stock indexes clawed back from steep losses to a mixed close on Monday as investors digested Friday’s employment report and prepared for an eventful week of inflation data and bank earnings.

Mega-cap momentum stocks dragged the tech-heavy Nasdaq slightly lower, while industrials helped boost the blue-chip Dow Jones into green territory.

The bellwether S&P 500 ended the session nominally higher.

Economically sensitive transports, semiconductors, small caps and industrials outperformed the broader market, hinting that the economy is sturdy enough to withstand further rate increases from the Federal Reserve.

“It is a go-nowhere day,” said Mr Sam Stovall, chief investment strategist of CFRA Research in New York.

“Investors are still convincing themselves that the Fed will raise interest rates by 25 basis points in May, which could add to the likelihood of an impending recession. And investor agita is increased ahead of (this week’s) consumer price index and producer price index reports.”

The Dow Jones Industrial Average rose 101.23 points, or 0.3 per cent, to 33,586.52; the S&P 500 gained 4.09 points, or 0.10 per cent, to 4,109.11; and the Nasdaq Composite dropped 3.6 points, or 0.03 per cent, to 12,084.36.

Of the 11 major sectors of the S&P 500, six ended the session higher, led by industrials. Communication services and utilities suffered the largest percentage losses.

On Friday, a market holiday, the United States Labour Department released its March jobs report, which showed robust payrolls growth and a welcome but modest wage inflation cool-down.

While the report signalled that the Federal Reserve’s restrictive policy is beginning to have its intended economic dampening effect, it raised the odds that the central bank will move forward with another 25-basis-point increase to the Fed funds target rate at the conclusion of its May policy meeting.

At last glance, financial markets have priced in a 72 per cent likelihood of that happening, according to CME’s FedWatch tool.

Recent indicators suggest a softening but sturdy economy, one that can withstand hawkish Fed policy as the central bank works to bring inflation closer to its 2 per cent annual target.

“There is clearly a disconnect between what the Fed is telling us it is going to do and what the market believes the Fed is going to do,” said Mr Oliver Pursche, senior vice-president at Wealthspire Advisors in New York. “When the Fed repeats time after time what its priorities are and what it is going to do, it is going to do it.”

Market participants will pay close attention to the consumer and producer price indexes, expected on Thursday and Friday respectively, for a more complete picture on the extent to which inflation cooled in March.

On Friday, a trio of big banks – Citigroup, JPMorgan Chase and Wells Fargo – unofficially kick off first-quarter earnings season, and investors will be scrutinising the reports for clues on the sector’s overall health after two US regional banks collapsed in March.

As at Friday, analysts expected aggregate S&P 500 earnings down 5.2 per cent year on year, a stark reversal from the 1.4 per cent annual growth expected at the beginning of the quarter, according to Refinitiv.

“Rarely can you injure yourself falling out of a basement window,” CFRA’s Mr Stovall said. “Expectations are set so low, the only surprise will be good news.”

Shale oil producer Pioneer Natural Resources jumped 5.8 per cent following a report that Exxon Mobil held preliminary talks with the company about a potential acquisition.

Charles Schwab gained 4.8 per cent in the wake of the broker’s reported second-highest influx of client assets in March.

Chip stocks Micron Technology and Western Digital gained 8.0 per cent and 8.2 per cent respectively on Samsung Electronics’ plans to cut chip production.

Advancing issues outnumbered declining ones on the New York Stock Exchange by a 1.63-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favoured advancers.

The S&P 500 posted two new 52-week highs and no new lows, while the Nasdaq Composite recorded 50 new highs and 155 new lows.

Volume on US exchanges was 9.09 billion shares, compared with the 12.28 billion average over the last 20 trading days. REUTERS