U.S. stocks finished Tuesday mostly flat as optimism about the economic reopening met lingering angst about inflation and price pressure.
The Dow added 45.86 points, or 0.13%, to end the day at 34,575.31 after gaining as many as 300 points shortly after the opening bell in New York. The S&P 500 fell less than 0.1% to 4,202.04 as weakness in technology stocks offset gains made in energy, materials and financials. The S&P 500 is 0.85% below its all-time high.
The Nasdaq Composite ended the day down nearly 0.1% at 13,736.48 as Microsoft shed 0.9%, Adobe lost 1.7% and Apple slipped 0.26%.
Investors began the first week of June on a high note as Covid cases continue to decline and vaccinations rise in the U.S. In a major milestone, more than half the U.S. population has received at least one dose of a Covid vaccination, according to data posted by the Centers for Disease Control and Prevention.
The improving domestic coronavirus situation, coupled with the arrival of summertime weather, sparked another day of strong gains in Wall Street's reopening trades like travel and hospitality.
American Airlines and United Airlines gained 1.7% and 2.2%, respectively, after the Transportation Security Administration said it screened an average of 1.78 million people from Friday through Monday, well above the volumes one year ago and another sign that U.S. air travel has reached a pandemic-era high.
Those volumes are more than six times higher than a year ago but still 22% below Memorial Day weekend in 2019.
Meanwhile, aircraft maker Boeing gained 3.1% after one analyst recommended investors discount near-term hurdles for the Dow component and buy the stock while it's still below where it traded in early 2020.
Shares of cruise-operators Carnival Corp. and Norwegian Cruise Line Holdings, two other reopening bellwethers, jumped 2% and 2.7%, respectively.
West Texas Intermediate oil for July delivery climbed by $1.40, or 2.1%, to settle at $67.72. Its settle represented its highest since 2018.
Meme stock AMC Entertainment rose even after the movie-theater chain sold $230.5 million in new stock to an investor. The stock gained 22% on Tuesday after doubling last week.
The blue-chip Dow and the S&P 500 gained 1.93% and 0.55% in May, respectively, to mark their fourth consecutive positive month. The small-cap Russell 2000 rose 0.11% in May to post its eighth positive month in a row — its longest monthly win streak since 1995.
The Nasdaq gained 2.06% last week to post its best weekly performance since April. However, the tech-heavy composite lost 1.53% in May, breaking a 6-month win streak.
The stock market was closed Monday for Memorial Day.
Despite the better coronavirus figures, investors remain on edge about the potential for a sustained and marked move higher in inflation. Higher prices the result of supply shortages and recovering demand could force the Federal Reserve to hike interest rates and curb asset purchases sooner.
A key inflation gauge — the core personal consumption expenditures index — rose 3.1% in April from a year earlier, faster than the forecasted 2.9% increase. Despite the hotter-than-expected inflation data, Treasury yields fell on Friday.
"Overall, given the market's reaction to [Friday]'s PCE release, investor concerns about inflation may have been exaggerated — or perhaps already priced in," Chris Hussey, a managing director at Goldman Sachs, said in a note.
"Consensus may be building that the inflation we are seeing today is 'good' inflation — the kind of rise in prices that accompanies accelerating growth, not a monetary policy mistake," Hussey said.
Investors are awaiting the Federal Reserve's meeting scheduled for June 15 and 16. Key for the markets is whether the Fed begins to believe that inflation is higher than it expected or that the economy is strengthening enough to progress without so much monetary support.
May's employment report, set to be released on Friday, will provide a key reading of the economy. According to Dow Jones, economists expect to see about 674,000 jobs created in May, after the much fewer-than-expected 266,000 jobs added in April.
Zoom Video Communications and Hewlett Packard Enterprise are set to report quarterly earnings results on Tuesday after the bell.
—CNBC's Patti Domm contributed reporting.