The Dow Jones Industrial Average slipped on Monday, snapping an eight-day winning streak, as traders grappled with rising inflation expectations ahead of key reports due later in the week.

The 30-stock Dow fell 81.33 points, or 0.21%, to close at 39,431.51. The S&P 500 inched lower by 0.02%, ending at 5,221.42. The Nasdaq Composite added 0.29%, closing at 16,388.24.

A New York Federal Reserve survey showed consumers last month raised their expectations for price increases in both the near and long term. On a one-year basis, inflation expectations rose to 3.3%. Their five-year outlook ticked up to 2.8%.

Stocks gave back earlier gains after the survey results were issued. The numbers also come ahead of two key economic data releases.

The consumer price index report is slated for Wednesday. Economists expect an April increase of 0.4% month over month and 3.4% year over year, according to Dow Jones. The producer price index, due out Tuesday, is expected to have risen 0.3% last month.

Shares of meme stock GameStop soared 74% after "Roaring Kitty," the moniker of the Reddit trader behind 2021's short squeeze, posted online for the first time in three years.

The 30-stock Dow is coming off its best weekly performance of 2024, rising more than 2% last week. The S&P 500 and Nasdaq climbed more than 1% each during that period.

The major averages have clawed back to within reach of their record levels set in March following a brief pullback. The Dow, S&P 500 and Nasdaq are all within 1% of their closing highs.

30-stock Dow finishes Monday lower

The Dow Jones Industrial Average closed Monday's trading session lower.

The 30-stock Dow slipped 81.33 points, or 0.21%, to close at 39,431.51. The S&P 500 slipped 0.02%, settling at 5,221.42. On the other hand, the tech-heavy Nasdaq Composite added 0.29% to finish at 16,388.24.

— Lisa Kailai Han

U.S. growth and large-cap stocks have an improved outlook, Barclays says

While value stocks continue to outperform in Europe, growth stocks are currently benefiting from improving forward guidance in the U.S., according to Barclays.

"Rates fell from their recent highs after Fed's dovish turn, further boosting the outlook for Growth," strategist Venu Krishna wrote. "We remain Positive on Growth in the US, while being Neutral on Value across both regions given that peak rates are behind us."

Krishna also reiterated his positive position on U.S. large caps over their smaller counterparts.

"In the U.S., Large caps' exposure to Quality and Sales/EPS Growth styles (themes we are positive on) along with the interest rate risks facing highly levered small caps lead us to maintain our Positive view on large over small," he added.

— Lisa Kailai Han

Citi is bullish on defense stocks

Wall Street is underappreciating the growth outlook for the defense sector, according to Citi. 

Witness the fact the SPDR S&P Aerospace and Defense ETF has risen about 6.1% year to date, lagging the S&P 500′s 9.6% gain. 

Nonetheless, Citi remains confident in "the bull case for defense." Fueled by "budget gimmicks in D.C. and headlines in the media," many investors believe that U.S. defense spending has stopped growing, according to analyst Jason Gursky. In reality, both the data as well as political rhetoric undercut that argument. What's more, European countries are raising their defense budgets, he added.

CNBC Pro can find some of Citi's favorite defense stocks here.

— Hakyung Kim

Markets experiencing a 'Goldilocks-style rally,' says HSBC

Last week's equity rally following a rocky period in April indicates the market is moving past its pullback, according to HSBC.

"The dip in risk assets is increasingly in the rear-view mirror as many major equity indices re-approach their year-to-date highs," strategist Duncan Toms wrote in a Monday note. "These broad-based gains once again resemble a Goldilocks-style rally."

With investors looking toward Wednesday's CPI report, Toms believes "the bar for ever more hawkish surprises is getting higher." Consequentially, the strategist believes even in-line expectations could be another catalyst for risk assets to climb higher.

— Hakyung Kim

Consumer staples look 'compelling,' BTIG says

After the utilities sector had a rebound rally last week, it could be time for another defensive group to have its turn in the spotlight, according to BTIG.

Strategist Jonathan Krinsky said in a note to clients Sunday evening that consumer staples could be the next overdue group to bounce.

"Below the surface, Utilities are no longer timely. We liked them in late March, and while we wouldn't fade the strength, we would await some consolidation here. Consumer Staples do still look compelling to us as they attempt to breakout of a multi-year base," Krinsky said.

Krinsky did caution that the "risk-on environment" may need to further weaken for staples to truly breakout.

"If Staples begin to outperform meaningfully, that would be more of a warning sign broadly," he said.

— Jesse Pound

Leon Cooperman says the Fed's policy is not too restrictive

Leon Cooperman, Omega Family Office chairman and CEO, believes the Federal Reverse's monetary policy is not too tight, citing a booming stock market with speculative activities.

"There's a lot of talk about the Fed being restrictive," Cooperman said on CNBC's "Power Lunch." "I don't think they're being restrictive. Where's the evidence that the Fed is restrictive? We have the stock market at or near a high. We have tremendous speculation individual stocks."

The widely followed investor said the catalysts for a financial crisis include a collapse in the dollar and the upcoming presidential election.

— Yun Li

Raymond James attributes utilities sector's outperformance to AI tailwind

Utilities has been the best-performing sector by far this quarter because of rising artificial intelligence needs, according to Raymond James.

"From a sector standpoint, the tremendous outperformance of utilities this quarter, likely the result of a narrative around the benefits of AI electricity needs, has been the most noticeable sector move," the financial firm wrote in a recent note.

The S&P 500 utilities sector index has added 8.4% so far this quarter. By contrast, communication services, the next best-performing sector, has increased 2.8% during the same period.

— Lisa Kailai Han

Next 2 weeks will set market's tone for start of summer, UBS says

How the market moves in the next two weeks will lay the groundwork for what will come in the first portion of summer trading, according to UBS.

Asset allocation head Jason Draho said the next two weeks should be noisy with the consumer price index and Nvidia earnings on deck. These can set the tone for the beginning portion of summer trading, he added.

"Inflation and NVIDIA earnings data that exceed expectations could set the stage for an early summer melt-up," Draho wrote in a note.

Having both macro and micro data points simultaneously top of mind is noteworthy, he wrote.

"It isn't common for investors, and therefore the markets, to be this highly sensitive to both macro and micro data points at the same time," Draho said. "Perhaps this distinction doesn't matter and market-moving information is important no matter the type. But there are investment implications from having two uncorrelated forces influencing market performance."

— Alex Harring

JPM's Kolanovic sees potential trouble as investors focus on soft landing

Stocks could see a cloudy environment over the next few months as investors position for a soft landing for the economy that could be thwarted by stubborn inflation, according to JPMorgan strategist Marko Kolanovic.

The market is "entering into [a] seasonally tricky time of the year, on top of a challenging combination of inflation at risk of staying too high and profit margin pressures," the bank's chief market strategist said in a note Monday. With stocks riding a solid rally over the past month, the rising danger is that markets get too complacent.

"The Goldilocks view that market embraced in Q1 of inflation/rates moving lower but at the same time of earnings acceleration and economy having no landing remains an inconsistent one," Kolanovic said. "We look for more of a consolidation in equity markets over the next months."

A consolidation is generally a time when markets slosh around between highs and lows, with little conviction higher or lower. To get past that point, Kolanovic said the "gap" between the Fed and market expectations "needs to close."

—Jeff Cox

Xponential Fitness drops after CEO placed on suspension

Xponential Fitness shares tumbled more than 9% on Monday after the top executive was suspended indefinitely.

CEO Anthony Geisler has been placed on suspension without a return date and is an inactive member of the board, the company said late Friday. The move comes after Xponential Fitness received notice last week that it was being probed by attorneys.

Xponential Fitness previously disclosed a U.S. Securities and Exchange Commission investigation in December. The Pure Barre and Club Pilates parent had been accused of intentionally misleading investors and franchise owners by providing incorrect information.

Shares of the fitness company, which is also the parent of CycleBar, have plummeted nearly 40% so far in 2024.

— Alex Harring, Brandon Gomez

Morgan Stanley 'remains confident' inflation will fall in 2024

Morgan Stanley sees inflation moving lower this year, the firm's chief global economist wrote in a recent report.

"While Wednesday's report will be critical for the timing of the first cut, regardless of the print, we remain confident that inflation will trend lower over the year, making the question when, not if, the Fed will cut," wrote Seth Carpenter, pointing to April's CPI report, which is due to be released Wednesday morning.

The economist clarified that while the timing of the first cut is up for debate, the path for the year is unlikely to change too much.

— Lisa Kailai Han

Cocoa prices tumble 19%, head for biggest daily drop since at least 1980

Cocoa prices dropped more than 19% on Monday, giving up some of the gains that boosted the commodity toward record highs this year.

Prices last traded at around $7,175, after dropping about $1,700 per metric ton. This drop would mark the biggest intraday decline since at least 1980.

— Samantha Subin

Walgreens, GameStop and Intel among stocks making biggest midday moves

Check out the companies making headlines in midday trading:

• Walgreens Boots Alliance — The stock advanced 5.4% on news that Walgreens is looking for potential buyers for its $8.8 billion Boots drugstore chain in the U.K., Bloomberg reported Monday.
• GameStop — Shares in the video game retailer soared more than 65% on Monday after "Roaring Kitty," the man who fueled the 2021 GameStop mania, posted online on Reddit for the first time in roughly three years. Trading was halted multiple times due to volatility.
• Xponential Fitness — Xponential Fitness shares were last up nearly 8.5% in volatile trading. The stock earlier Monday had tumbled more than 9%, reaching a 52-week low, after the company's top executive was suspended without a return date.

For the full list, read here.

— Pia Singh

Shares of Reddit and Robinhood jump

Reddit and Robinhood appear to be benefiting from the renewed interest in GameStop.

Shares of the social media company rose 9%, while the brokerage stock rose 8%. Both companies saw heavy user activity during the 2021 meme stock era, though neither had a publicly traded stock when GameStop first took off.

— Jesse Pound

Fed's Jefferson backs 'restrictive' interest rate policy

Federal Reserve Vice Chair Philip Jefferson backed the central bank's current stance of monetary policy, saying Monday that a higher level of interest rates is appropriate until more evidence comes in that inflation is on a sustainable path lower.

"My view is that in light of the attenuation in progress in terms of getting inflation down to our target, it is appropriate that we maintain the policy rate in restrictive territory, which it is right now," Jefferson said in a question-and-answer session with outgoing Cleveland Fed President Loretta Mester.

The Fed should "continue to look for additional evidence that inflation is going to return to our 2% target, and until we have that, I think it is appropriate to keep the policy rate in restrictive territory," he added.

As a governor, Jefferson is a permanent voting member of the rate-setting Federal Open Market Committee.

— Jeff Cox

Short sellers suffer $1 billion loss Monday on GameStop, S3 Partners says

Monday's rally in GameStop slapped short sellers with a $1.02 billion mark-to-market loss on their positions in early trading, according to Ihor Dusaniwsky, managing director at S3 Partners, which closely monitors short selling activity.

Monday's losses "more than offsets the very profitable first four months of the year that GME short sellers had, earning +$392 million mark-to-market profits, +47%," Dusaniwsky wrote in an email. "Including today's losses, GME shorts are now down -$1.43 billion in May month-to-date losses, and now down -$1.03 billion for the year." 

Losses notwithstanding, S3 expects "new short sellers to jump into this trade as GME stock prices around or above the $30 level will be attractive entry points for new short selling."

Moreover, "meme stock frenzy buying may be back with AMC up over 20% and DJT up 9%," Dusaniwsky said. "Short sellers may be in for a bumpy and bloody ride in these stocks."

— Scott Schnipper

GameStop volume more than triples

GameStop has already traded more than 36 million shares, as the brick-and-mortar video game retailer soared following a post from "Roaring Kitty." That volume easily eclipses the stock's 30-day average of 9.9 million.

— Fred Imbert

Stocks open higher

Stocks rose to open Monday's trading session.

The S&P 500 added 0.3%, as did the Nasdaq Composite. The Dow Jones Industrial Average opened 126 points higher, or 0.3%.

— Lisa Kailai Han

AllianceBernstein sees Apple rising 28% in bull case

In AllianceBernstein's bull case for Apple, analyst Toni Sacconaghi believes the iPhone maker's stock could rally 28% to $235.

"The bull case is that replacement cycle and AI tailwinds could drive a strong iPhone 16 cycle, and that Apple's longer-term valuation is reasonable given its ultra-high quality of earnings/cash flow, strong moat, and sustained growth story," the analyst wrote in a note from Monday.

Sacconaghi has currently assigned the stock an outperform rating accompanied by a price target of $195, implying that shares could add nearly 7% from their Friday close.

In the same report, the analyst said he is less concerned about the China marketplace.

"We see China's business as cyclically pressured, not structurally altered, he added.

— Lisa Kailai Han

Stocks making the biggest moves premarket

Check out the companies making headlines before the bell:

GameStop — GameStop shares rallied more than 37% in the premarket after "Roaring Kitty" posted for the first time in roughly three years. The post, a picture on social media site X of a video gamer leaning forward on their chair as to indicate he is taking the game seriously, marked Roaring Kitty's first post on the platform — or on Reddit — since 2021.

Arm Holdings — Shares popped 3.4% following a Nikkei report that the chip company is looking to launch its first artificial intelligence chips next year. Arm hopes to build the prototype by spring 2024, according to the report.  

Nvidia — Nvidia shares added about 1% after Jefferies hiked its price target on the chipmaker to $1,200 a share, implying about 34% upside. "We believe it's too early to sift out winners and losers in the AI basket yet, but NVDA is our favorite," analyst Blayne Curtis wrote.

— Hakyung Kim

Morgan Stanley Research sees 'cooling' U.S. economy, 3 rate cuts ahead

Morgan Stanley sees signs that the U.S. economy is cooling, with disinflation set to resume in April's CPI print and accelerate in the latter half of 2024.

"Weaker monthly prints ahead with faster disinflation starting in 2H24 should provide the Fed the confidence it needs that inflation is on a sustained path toward target," the bank wrote in a recent note. "We remain bullish the Fed will cut three times this year — but starting in September rather than July — with two more cuts in November and December."

Against this backdrop, the bank wrote that it currently prefers consumer staples stocks over their discretionary counterparts.

"We see the U.S. Consumer Staples sector as a beneficiary of trade-down from Discretionary categories; further, relative earnings revisions of Staples vs. Discretionary has recently turned higher, pointing to potential upside in relative stock performance by Staples from here," it said.

— Lisa Kailai Han

GameStop surges after ‘Roaring Kitty’ post

GameStop shares rallied more than 37% in the premarket after "Roaring Kitty" posted for the first time in roughly three years.

The post, a picture on social media site X of a video gamer leaning forward in their chair as to indicate he is taking the game seriously, marked Roaring Kitty's first post on the platform — or on Reddit — since 2021.

Kitty, whose legal name is Keith Gill, is one of the Reddit traders who drove the meme stock craze of 2021.

— Fred Imbert, Yun Li

Big inflation data due out this week

This week's key events include two major U.S. inflation reports, as investors look for clues on whether the Federal Reserve will cut interest rates this year.

The consumer price index report is due Wednesday. Economists polled by Dow Jones expect CPI to have risen in April by 0.4% month over month and 3.4% year on year. Core CPI, which excluded food and energy, is expected to have risen 0.3% from March and 3.6% year over year.

The producer price index is due Tuesday and is expected to have risen 0.3% month over month.

— Fred Imbert

European markets open mixed

European markets kicked off the new trading week in mixed territory, with the pan-European Stoxx 600 gaining slightly to trade up 0.03%.

The U.K.'s FTSE 100 index was 0.07% higher at 8,439, Germany's DAX was down 0.13% at 18,748, France's CAC was 0.4% lower at 8,216 and Italy's FTSE MIB was up 0.4% at 34,808.

— Karen Gilchrist

China reportedly moves ahead with plans to sell long-term bonds worth $138 billion

China has reportedly begun plans to sell one trillion yuan ($138.24 billion) of ultra-long-term bonds, according to reports by the Financial Times and Reuters.

The Financial Times said that the People's Bank of China "has asked brokers for advice on pricing the sale of the first batch of the sovereign bonds."

Meanwhile, Reuters said the bonds will be issued from May 17, citing sources that said there would be 300 billion yuan worth of 20-year bonds, 600 billion yuan worth of 30-year bonds and 100 billion worth of 50-year bonds.

These ultra long term bonds were announced in March, and are designed to fund major projects aligned with national strategies.

These bonds have only been issued thrice before, during the Asian Financial Crisis in 1998, for the capitalization of China Investment Corporation in 2007 and during the Covid-19 pandemic in 2020.

— Lim Hui Jie

Shein reportedly boosts London IPO preparations amid U.S. hurdles

China's Shein is boosting its preparations to go public in London following an attempt to list in New York that was hit by regulatory challenges, Reuters reported, citing sources with knowledge of the matter.

The fast-fashion retailer is planning to file documents with the London Stock Exchange as early as this month and will update China's securities regulator of the IPO venue, according to the report.

Shein filed to go public in the U.S. in late November, valued at $66 billion.

— Shreyashi Sanyal, Reuters

China's April inflation comes in slightly higher than expected

Consumer prices in China rose at a faster pace than expected, with the consumer price index in April recording a 0.3% increase year on year, data from the National Bureau of Statistics on Saturday showed.

This was higher than the 0.2% forecast by a Reuters poll of economists, and more than the 0.1% rise seen in March.

Separately, China's producer price index fell 2.5% compared to April last year, compared to a 2.8% decline in the previous month.

— Lim Hui Jie

Stocks face a key inflection point this week with April inflation data

Wednesday's consumer price index report will give much-needed insight to where the Federal Reserve will take monetary policy from here.

Inflation has ticked higher in recent months and has spurred worry that price pressures could consistently tick higher once again. Federal Reserve Chair Jerome Powell said last month the Fed's next move would not likely be a rate hike and reiterated a data-dependent approach. The sentiment has helped stocks that have found stable footing due to a robust first-quarter earnings season.

Still, the CPI print on Wednesday will give investors a real test of whether or not rate hikes are really off the table.

CNBC Pro subscribers can read more here.

— Brian Evans

Stock futures are little changed

Stock futures were little changed on Sunday, with investors turning their attention to fresh inflation data this week.

Futures tied to the S&P 500 fell 0.09%, while Nasdaq 100 futures hovered near the flatline. Dow Jones Industrial Average futures slipped 37 points, or 0.09%.

— Brian Evans