NEW YORK >> Wall Street drifted through a muted day of trading Tuesday, with stocks and bonds making modest moves ahead of reports later in the week with the potential to move markets.

The S&P 500 had its smallest one-day move in more than a year, slipping 0.17 points, or less than 0.1%, to 4,108.94. Most of the stocks in the index rose, as did the Dow Jones Industrial Average, which gained 98.27, or 0.3%, to 33,684.79. The Nasdaq composite slipped 52.48, or 0.4%, to 12,031.88.

The biggest immediate question for Wall Street has been whether the Federal Reserve will keep hiking interest rates in its attempt to get high inflation under control. It’s already raised rates at a furious pace over the last year, enough to slow some areas of the economy and for strains to appear in the banking system.

That’s why markets are gearing up for Wednesday’s report on inflation. Economists expect it to show inflation slowed to 5.2% in March from 6% in February. That would mean continued progress since inflation peaked last summer, but it would also still be well above the Fed’s target.

A reading that’s higher than expected would likely bolster traders’ expectations that the Fed will raise rates by another quarter of a percentage point at its next meeting in May. Higher rates can undercut inflation, but they also raise the risk of a recession later on and hurt prices for stocks and other investments.

Traders in the bond market have been showing nervousness about the Fed possibly going too far on rates and then having to cut them as soon as this summer in order to prop up the economy. But the stock market has remained more resilient, helped by hopes the Fed could thread the needle and raise rates just enough to stifle inflation without causing a severe recession.

“While navigating the fickle market narrative isn’t easy, it helps that rates are pricing in a more pessimistic view compared to equities, which are leaning toward a more optimistic outlook,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. That’s one of the reasons he prefers high-quality bonds over stocks.

Still-high inflation is one of the reasons analysts expect this upcoming earnings reporting season to show the worst drop since the depths of the pandemic in 2020. A bunch of banks will help kick off the earnings reporting season when they tell investors on Friday how much they earned during the first three months of the year.

Besides the backwards-looking numbers, investors say they’re also hungry to hear what CEOs say about current and upcoming conditions. One fear is that banks in particular could pull back on their lending following all the turmoil in their sector, caused in part by the past year’s swift leap in interest rates.

If they do cut off lending to businesses, that could further slow the economy and raise the risk of a recession.

CarMax jumped 9.6% after reporting stronger profit than analysts expected for its latest fiscal quarter, which ended Feb. 28. It had the biggest gain within the S&P 500, and stocks in industries whose profits are most closely tied to the economy’s strength generally rose.

On the losing end was Moderna, which fell 3.1% after it said its potential flu vaccine needs more study in a late-stage clinical trial.

Big Tech stocks were also weak. They and other high-growth stocks are seen as the most hurt by rising interest rates, and a 2.3% drop for Microsoft was the heaviest drag on the S&P 500.

In markets abroad, stocks rose modestly across much of Europe.

In Asia, stocks jumped 1.4% in Seoul after the Bank of Korea left its policy interest rate unchanged for a second straight meeting. It’s one of many regional central that are now slowing or reversing rate increases due to signs of weakness in the economy.

In the bond market, yields were holding relatively steady. The 10-year Treasury yield was holding firm at 3.42%. It helps set rates for mortgages and other important loans.

The two-year yield, which more closely tracks expectations for the Fed, ticked up to to 4.02% from 4.01% late Monday.

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AP Business Writers Elaine Kurtenbach and Matt Ott contributed.