New York — After a surprising strong manufacturing data put doubt on how much interest rates can ease this year, most U.S. stocks fell Monday. The S&P 500 fell 10.58 points, or 0.2%, from its record high to 5,243.77. The Dow hit 39,566.85, down 240.52 points, or 0.6%, from its record. An outlier, the Nasdaq composite rose 17.37, or 0.1%, to 16,396.83.
FedEx lost 3.3% after its contract with the USPS to deliver air cargo domestically expired on Sept. 29. Trump Media & Technology Group lost over 20% of its value in another wild trading day. The Truth Social platform company lost $58.2 million last year on $4.1 million in revenue. Its stock fell 21.5%.
Universal Health Services fell 4%, one of the S&P 500's biggest losses. It said an Illinois jury awarded $535 million to a plaintiff who claimed negligence in a sexual-assault case involving another patient. The corporation has insurance to cover some of the cost, but the case's outcome may affect its finances.
Helping control losses was Newmont. The miner's stock increased 1.6% as gold prices set records. Treasury yields rose after a report showed surprising U.S. manufacturing growth last month. It ended a 16-month contraction, per the Institute for Supply Management.
The latest evidence shows the U.S. economy is solid despite high interest rates. The stock market benefits because it boosts company profits. But it can also boost inflation. That could make the Federal Reserve less likely to decrease interest rates as investors want.
After the manufacturing report, Wall Street traders briefly lowered their expectations for a June rate cut. Deutsche Bank economists call that a “reasonable baseline” forecast, but recent Fed tough language suggests interest rates will stay higher longer than expected.
The Fed raised its main rate to its highest level since 2001 to slow the economy and lower investment prices to contain inflation. Expectations of cuts drove the S&P 500 up almost 20% from October to March.
Job openings and U.S. services business strength will be reported this week, which could influence the Fed. Friday will bring the headliner: economists predict hiring to cool last month. Wall Street hopes for a slowdown to keep the economy robust but not raise inflation. Inflation is lower than nearly two years ago. Recent reports this year have been hotter than projected, slowing progress.
On Friday, Fed Chair Jerome Powell said that the central bank wants “more good inflation readings” before decreasing rates this year. It still expects three rate decreases in 2024. On Friday, a report stated inflation is behaving as expected, per the Fed's preferred measure. That day, U.S. bond and stock markets were closed.
as anticipating more cuts, Wall Street traders now expect three cuts this year, but some bets pointed to fewer cuts as manufacturing statistics beat expectations this morning. The 10-year Treasury yield rose to 4.31% from 4.21% late Thursday. More closely tracking Fed projections, the two-year yield rose to 4.71% from 4.63%.
The Nikkei 225 slumped 1.4% after a Bank of Japan quarterly poll on business conditions showed major manufacturers' morale dipped for the first time in a year. Chinese equities rose 1.2% in Shanghai as surveys showed manufacturing growth.
View for more updates