Wall Street Drifts Near Records as it Heads for the Finish of a Winning Week

NEW YORK (AP) -- Wall Street is drifting on Friday toward the finish of its third winning week in the last four, as more big U.S. companies deliver stronger profits for the spring than analysts expected.

The S&P 500 was 0.1% higher in morning trading after setting its all-time high the day before. The Dow Jones Industrial Average was down 107 points, or 0.2%, as of 10:05 a.m. Eastern time, and the Nasdaq composite was up 0.2% after coming off its own record.

Norfolk Southern chugged 3% higher after an AP source said it's talking with Union Pacific about a merger to create the largest railroad in North America, one that would connect the East and West coasts. Any such deal, though, would likely face tough scrutiny from U.S. regulators. Union Pacific's stock fell 1%.

Netflix, meanwhile, dropped 5.7% despite reporting a stronger profit for the latest quarter than Wall Street expected. Analysts said it's not a surprise the stock was sluggish after it had already soared 43% for the year so far, coming into the day. That's six times more than the gain for the S&P 500. It was the single heaviest weight on the S&P 500.

Stronger-than-expected profit reports for the spring helped several other stocks rally. Charles Schwab climbed 3.1%, Regions Financial rose 4.5% and Comerica added 1.7%.

Chevron climbed 0.5% after saying it had completed its acquisition of Hess. The buyout got its go-ahead following a favorable arbitration ruling for Chevron about some of Hess' assets off Guyana's coast.

In the bond market, Treasury yields eased after a report suggested U.S. consumers may be feeling less fearful about coming inflation. They're bracing for inflation of 4.4% in the year ahead, down from last month's projection of 5%, according to preliminary results from the University of Michigan's survey.

That's important because expectations for high inflation can feed into behaviors that create a vicious cycle keeping inflation high. Overall sentiment, meanwhile, was a hair better than economists expected but still well below its historical average.

"Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future," according to Joanne Hsu, the survey's director.

The yield on the 10-year Treasury sank to 4.43% from 4.47% late Thursday. The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do with its short-term rates, also dropped. It fell to 3.87% from 3.91%.

A top Fed official, Gov. Chris Waller, said late Thursday that the Fed should cut its overnight interest rate as soon as its next meeting in a couple weeks. That follows sharp criticism from President Donald Trump, who has been castigating the Fed for holding interest rates steady this year instead of cutting them, as it did late last year.

Lower rates could give the economy a boost, and Trump has also implied they could help the U.S. government save money on its debt payments, though that's uncertain. The interest rates Washington has to pay on its longer-term debt can depend more on what bond investors think than on what the Fed does, and they can even move in opposite directions.

The chair of the Fed, meanwhile, has been insisting that he wants to see more data about how Trump's tariffs will affect the economy and inflation before the Fed makes its next move. The downside of lower interest rates is that they can give inflation more fuel, and prices may already be starting to feel the upward effects of tariffs.

Traders on Wall Street still think it's much more likely that the Fed will resume cutting interest rates in September, rather than later this month, according to data from CME Group.

In stock markets abroad, indexes were mixed across Europe and Asia. Hong Kong's Hang Seng jumped 1.4%, but Tokyo's Nikkei 225 slipped 0.2% ahead of an election for the upper house of parliament on Sunday that could wipe out the ruling coalition's upper house majority.

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AP Writers Teresa Cerojano and Matt Ott contributed.

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