US stocks paused on Monday after a strong rally in the prior session as investors shift focus to a key inflation reading later this week.

For most of the day, stocks struggled for direction amid disappointing earnings from Tyson Foods and Catalent and a short-lived rebound in regional banks.

Shares of Catalent tumbled 25.74 percent as the contract drug manufacturer saw lower revenue and core profit in 2023, while Tyson Foods tanked 16.41 percent on a surprise second-quarter loss and a cut in its annual revenue forecast.

A rebound in shares of regional lenders ran out of steam by midday, with the KBW Regional Banking index falling 2.82 percent after posting its best single-day performance in seven weeks on Friday.

The Dow Jones Industrial Average fell 0.17 percent, to 33,619, the S&P 500 gained 0.05 percent, to 4,138 and the Nasdaq Composite added 0.18 percent, to 12,257.

The struggle for a clearer direction comes after a rally on Friday, when US jobs data pointed to a resilient labour market.

"Whenever you have a big up day, people need more good news to keep the market up every day in a row," said portfolio manager Moez Kassam of Anson Funds.

The spotlight this week will be on the Labour Department's inflation reading on Wednesday, which is expected to show the consumer price index (CPI) likely climbed 0.4 percent in April after gaining 0.1 percent in March. Producer prices, weekly jobless claims and consumer sentiment data are all lined up for the week.

The data this week should help investors gauge whether the Federal Reserve's aggressive tightening cycle - including its most recent 25 basis point hike last week - is helping tamp down inflation as well as whether fears of stagflation are founded.

"The bigger picture is inflation will remain higher for longer and that we are heading into a recession," Michael James, managing director of equity trading at Wedbush Securities.

"Whether that's hard or soft remains to be seen, but until there's something to disprove that bigger picture thesis, the overall market is going to remain somewhat range bound." (Reuters)