The Dow and S&P 500 fell on Monday as investor concerns over the timetable of Federal Reserve interest rate decreases rose after stronger-than-expected manufacturing data raised Treasury yields.
From 47.8 in February, the Institute for Supply Management (ISM) manufacturing PMI rose to 50.3 last month, the highest and first above 50 since September 2022. Higher interest rates had hurt manufacturing, but it appeared to be improving.
Nasdaq and S&P 500 technology (.SPLRCT) finished marginally higher. The semiconductor index (.SOX) rose 1.2%. “If the economy is still reasonably solid and PMI data is starting to go up, that basically says there could be some upside pressure in yields," said Keith Lerner, chief market strategist at Truist Wealth in Atlanta.
The Dow Jones Industrial Average (.DJI) sank 240.52 points, or 0.60%, to 39,566.85, the S&P 500 (.SPX) lost 10.58 points, or 0.20%, to 5,243.77, and the Nasdaq Composite (.IXIC) gained 17.37 points, or 0.11%, to 16,396.83.
According to CME's FedWatch tool, the June U.S. rate futures market was pricing in a 58% possibility of a drop, down from 64% a week earlier. "We would prefer a stronger economy with less rate cuts than a weaker economy with more rate cuts, but, on a short term basis, the narrative has moved to about three rate cuts," he said.
The Wall Street entrance to the New York Stock Exchange (NYSE) in New York City. Photo: Brendan McDermid/Reuters Buy Photo Licensing Rights. Governor Christopher Waller and Atlanta President Raphael Bostic want less than three cutbacks this year.
Most S&P 500 sectors fell, with real estate (.SPLRCR), healthcare (.SPXHC), and utilities (.SPLRCU) hardest hit. Energy (.SPNY) gains a new tab with higher crude oil prices. The U.S. telecoms company reported a significant data leak that affected current and former account holders, lowering its shares by 0.6%.
U.S. exchanges traded 10.22 billion shares, compared to 12 billion for the full session over the past 20 days. The NYSE had a 1.90-to-1 decliner-to-advancing issue ratio, while Nasdaq had 1.73. The S&P 500 had 36 new 52-week highs and 2 new lows, while the Nasdaq Composite had 97 and 74.
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