Wall Street drifts as stock rally takes a pause; yields drop

NEW YORK — U.S. stocks are drifting between small gains and losses today as Wall Street takes a pause following its big rally over the last couple months.

The S&P 500 was virtually flat in morning trading after earlier flipping from a loss of 0.2% to a similar gain. The Dow Jones Industrial Average was up 8 points, or less than 0.1%, at 26,672, as of 9:30 a.m. Central time, and the Nasdaq composite was up 0.1%.

Stock indexes are hanging close to their record highs after erasing most or all of their sell-off from earlier in the year, with the Nasdaq on pace to set another record and the S&P 500 within 3% of its all-time high. But caution is still very prevalent across other markets: Treasury yields were falling, while gold was rising as investors sought safety.

Within the stock market, Wall Street was close to evenly split between rising and falling stocks following a mixed set of earnings reports.

On the winning end was Take-Two Interactive Software, which rose 3.9%. The video-game maker reported even stronger profit growth for the spring than Wall Street expected as customers stuck at home played Grand Theft Auto and other games, which they paid for online.

It also raised its sales forecast for its fiscal year, a notable move when many companies have been shy to give any kind of predictions given all the uncertainty created by the coronavirus pandemic.

On the opposite end was insurer American International Group. AIG fell 6.7% for one of the larger losses in the S&P 500 even though it reported stronger results for the latest quarter than Wall Street expected. Some analysts said the profit report was full of unusual items, such as COVID-related losses, which makes it difficult to extrapolate how AIG’s profits will run from here.

In Washington, meanwhile, negotiators on a big economic relief package reported some progress as their talks resumed in the Capitol. But multiple obstacles remain before a deal can be struck, one that investors say is crucial for propping up the economy in its weakened state.

A weekly $600 in federal unemployment benefits has expired, threatening to crunch the finances of millions of out-of-work Americans. Recent reports have shown an uptick in the number of workers filing for unemployment after a resurgence of coronavirus counts pushed some states to reimpose restrictions on businesses.

The Federal Reserve last week said that it will keep interest rates at their record low levels, as it continues to pump massive amounts of aid into the economy. Now, investors are waiting for Congress to do the same.

The yield on the 10-year Treasury note fell to 0.51% from 0.56% late Monday. It tends to move with investors’ expectations for the economy and inflation.

The bond market was much earlier than the stock market to signal the coming economic disaster from the coronavirus pandemic. It has also remained much more cautious through the pandemic than the stock market has, in large part due to the Federal Reserve holding short-term interest rates at record lows.

Gold, another investment that has moved strongly recently because of low interest rates and worries about the global economy, rose 0.8% to $2,001.90 per ounce.

In Europe, Germany’s DAX slipped 0.2% to give back some of its big gain from a day earlier, when reports showed that manufacturing recovered across much of the continent last month. France’s CAC 40 added 0.4%, and the FTSE 100 in London was virtually flat

In Asia, markets were more buoyant. Tokyo’s Nikkei 225 gained 1.7%, the Hang Seng in Hong Kong added 2% and the Kospi in Seoul picked up 1.3%. Stocks in Shanghai edged 0.1% higher.

Benchmark U.S. crude oil rose 0.2% to $41.09 per barrel. Brent crude, the international standard, lost 0.5% to $43.95 per barrel.