Stock market today: Wall Street drifts after tepid report on economy

NEW YORK -

U.S. stocks are drifting Monday to begin what could be a quiet stretch following their best week since March.

The S&P 500 edged up 0.1% in morning trading. The Dow Jones Industrial Average was down 120 points, or 0.3%, at 33,652, as of 11:15 a.m. Eastern time, while the Nasdaq composite was 0.4% higher.

The indexes were listless after a report showed businesses in the accommodation, construction and other U.S. services industries grew in May for a fifth straight month, though by less than economists expected. It's the latest mixed reading on the U.S. economy, which has begun to slow under the weight of higher interest rates but has defied forecasts for a recession so far.

More stocks were falling in the S&P 500 than rising, but a gain for market heavyweight Apple helped to steady Wall Street. It rose 1.7% ahead of an event where it's expected to unveil a long-rumored headset that will place its users between the virtual and real world,

In the oil market, crude gained after Saudi Arabia said it would cut back production in hopes of boosting its price. A barrel of U.S. crude rose 1.2% to $72.62, and a barrel of Brent crude, which is the international standard, climbed 0.6% to $76.60.

Both were close to $120 a year ago, and their prices have fallen on worries that a strapped global economy would burn less fuel.

Elsewhere, Wall Street was relatively quiet. This upcoming week is light on earnings reports and top-tier economic data. That leaves few clues for the dominant question hanging over the market: Which will come first, the economy falling into a recession or inflation easing enough for the Federal Reserve to cut interest rates?

That's why much attention is on next week, when the government will release the latest monthly updates on inflation at the consumer and wholesale levels. It's also when the Fed will meet next on interest rate policy. Traders are largely betting that it will stand pat on rates, which would mark the first meeting where it hasn't hiked in more than a year.

The bet on Wall Street, though, is that it could resume hiking rates in July. The reason for such a pause would be to give the Fed time to assess its furious pace of rate hikes over the last year.

The goal of high rates is to lower inflation by slowing the entire economy and dragging down prices for stocks, bonds and other investments. With rates at their highest level since 2007, several high-profile U.S. bank failures since March have already shaken the market, while the manufacturing industry has been contracting for months.

The job market, though, has managed to remain remarkably solid despite them. That's helped U.S. households continue to spend, which has kept the economy out of a recession. Last week, data showed that U.S. employers unexpectedly accelerated their hiring in May, while increases in workers' wages slowed to keep some pressure off inflation.

Despite all the uncertainty about the economy, Wall Street remains on the the edge of what's called a "bull market" following weeks of gains.

The S&P 500 is sitting just below 4,290, and if it finishes the day above 4,292.44, it will be more than 20% above where it was in mid-October. That would mean Wall Street's main measure of health has transformed from its frigid "bear market," when it fell more than 20% over nine months, into a powerful bull.

In the bond market, the yield on the 10-year Treasury fell to 3.67% from 3.70% late Friday.

The two-year Treasury, which moves more on expectations for the Fed, dropped to 4.47% from 4.51%. It had been higher earlier in the morning, before the weaker-than-expected report on the U.S. services industries.

In stock markets abroad, indexes were mostly lower in Europe. Japan's Nikkei 225 jumped 2.2%, while gains in other Asian markets were more modest.

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AP Business Writers Matt Ott and Joe McDonald contributed