By Caitlin Ostroff 

U.S. stocks edged higher Friday, putting the S&P 500 on track to notch a fresh record and its third consecutive weeks of gains.

The S&P 500 added 0.2% shortly after the opening bell, a day after the market benchmark closed at a high. The Nasdaq Composite was little changed. The Dow Jones Industrial Average added 137 points, or 0.4%. The S&P 500 and Nasdaq are on course for modest weekly gains, while the Dow is poised for a slight loss.

Major indexes are hovering near all-time highs, leaving investors looking for any catalysts that may propel the next leg in what has been a sharp rally since the March 2020 rout. Fresh spending plans by the Biden administration that could result in higher taxes, as well as stocks' high valuations and the emergence of new Covid-19 variants, are making people more cautious. Money managers are also weighing whether the rise in inflation is likely to be transitory.

"We're still positive on the outlook, but we're not as optimistic as we were three months ago," said Daniel Morris, chief market strategist at BNP Paribas Asset Management. "The market needs to take a breather and let earnings catch up to where prices are."

Meme stocks have continued to record sharp swings even as the broader markets have been calmer. AMC Entertainment Holdings rallied 4% on Friday morning, and GameStop jumped 5%.

In bond markets, the yield on the 10-year Treasury note ticked up to 1.460%, from 1.458% Thursday, which was its lowest since March 2. Yields rise when prices fall. Yields had been dragged down for three straight days by tepid economic data and high demand from investors both in the U.S. and elsewhere.

The Labor Department on Thursday said the U.S. economic rebound is driving the biggest surge in inflation in nearly 13 years, with consumer prices rising in May by 5% from a year ago. Investors have been concerned for some weeks that a sharp and sustained rise in inflation may prompt the Fed to weigh ending its easy money policies in coming quarters. More recently, the market's inflation expectations have abated, but it remains a focus point for many people.

"Inflation clearly is the big risk out there," said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald. "Some of the teeth have been softened over the last 24 hours, but there is still the risk that the Fed comes out and says maybe this is more sustained, and that changes the narrative, so central banks are still very much a thing to watch."

Investors will get fresh data indicating whether Americans' outlook for the economy has improved when the University of Michigan's preliminary index of consumer sentiment for this month is released at 10 a.m. ET.

Overseas, the pan-continental Stoxx Europe 600 rose 0.7% after closing Thursday at an all-time high.

Major stock indexes in Asia closed on a mixed note. The Shanghai Composite Index declined 0.6%. South Korea's Kospi Index rose 0.8%, while Hong Kong's Hang Seng Index added 0.4%.

Gunjan Banerji contributed to this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

June 11, 2021 10:14 ET (14:14 GMT)