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By Pete Schroeder

WASHINGTON - Persistent concerns that inflation may be rising more sharply and sticking around longer than originally expected weighed on Wall Street, with pessimism weighing on stocks and oil and pushing safe havens like the U.S. dollar upwards.

The Dow Jones Industrial Average fell 0.04%, the S&P 500 ended flat, and the Nasdaq Composite dropped 0.04%.

The MSCI world equity index, which tracks shares in 45 nations, rose 0.08%.

Investors likely will be closely watching fresh data on U.S. retail sales out on Tuesday, after a report out Friday showed consumer sentiment hitting its lowest point in a decade, due in part to inflation.

"Stocks were more or less in a holding pattern today, and after the market finished last week in the red, it could be searching for some direction," said Mike Loewengart, managing director of investment strategy at E*TRADE Financial. "As inflation continues to be the topic du jour, investors likely have their sights set on an update from retailers with earnings and retail sales on deck for some insight into the consumer and how they’re handling pricing pressure."

Rising Treasury yields also helped push equity prices lower, with benchmarks hitting three-week highs as companies rushed to debt markets ahead of the holiday stretch.

The 20-year bond yields rose 5 basis points to 2.04% while 30-year bond yields increased 5 basis points to 2.01%.

Benchmark 10-year yields gained 4 basis points to 1.62% and are up from a one-month low of 1.42% last Tuesday.

Oil prices settled somewhat after hitting a one-week low in earlier trading, ending the day in mixed territory. Crude prices had previously been pushed down by speculation that President Joe Biden's administration could tap the U.S. Strategic Petroleum Reserve.

Brent futures settled down 12 cents, or 0.2%, to $82.05 a barrel while U.S. West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to $80.88.

DOLLAR LEAPS

Investor concern helped push the U.S. dollar to a 16-month high against major peers Monday, as its safe-haven status proved appealing in uncertain times.

The dollar index, which measures the currency against six peers, hit 95.510 on Monday, its highest since July 2020, and was last up 0.398% at 95.394.

The dollar's surge comes after a surprise report last week showing U.S. inflation on the rise weighed down markets, as investors wondered if the Federal Reserve might be forced to raise rates sooner, and if the U.S. consumer will have to consider higher prices for longer.

"Inflation is being driven by the unusual supply shocks tied to the restart. We expect these imbalances to resolve over the next year, but see inflation as persistent and settling at a higher level than pre-COVID," wrote Blackrock analysts in an investor note. "Although price rises are broad based, the mix of inflation shows the unusual restart dynamics at play."

Fellow safe-haven gold hit a five-month high earlier in the trading day, but ended up settling a touch lower, ending a seven-session winning streak.

Spot gold prices fell 0.10% to $1,862.24 an ounce.

Graphic: The US dollar index https://fingfx.thomsonreuters.com/gfx/mkt/klvykdmrrvg/USD1511.PNG

(Reporting by Pete Schroeder in Washington; Additional reporting by Wayne Cole in Sydney; Editing by Angus MacSwan, Chizu Nomiyama, William Maclean and Marguerita Choy)