Dow and S&P Close Lower as Manufacturing Data Boost Yields

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On Monday, both the Dow Jones Industrial Average and the S&P 500 experienced slight declines, driven by concerns among investors regarding the timing of potential interest rate cuts by the Federal Reserve. This apprehension arose after stronger-than-expected manufacturing data led to an increase in Treasury yields.

The Institute for Supply Management (ISM) reported that its manufacturing Purchasing Managers’ Index (PMI) rose to 50.3 last month, the highest level since September 2022, indicating a recovery in the manufacturing sector. This positive data suggested that the economy might still be resilient, prompting a rise in Treasury yields.

While the Nasdaq closed slightly higher, led by gains in the technology sector, the Dow and S&P 500 saw losses. Semiconductor stocks performed well, with the semiconductor index jumping 1.2%.

Market strategist Keith Lerner noted that the strengthening PMI data and the possibility of a strong economy could exert upward pressure on yields.

The Dow Jones Industrial Average fell by 240.52 points, the S&P 500 lost 10.58 points, and the Nasdaq Composite gained 17.37 points.

Investors are closely watching Federal Reserve officials’ remarks for insights into the central bank’s policy direction. Key Fed officials have expressed a preference for fewer than three rate cuts this year, suggesting a more hawkish stance.

The majority of S&P 500 sectors experienced declines, with real estate, healthcare, and utilities among the worst hit. However, the energy sector gained ground, supported by stronger crude oil prices.

Among individual stocks, AT&T shares slipped after the company disclosed a significant data leak affecting current and former account holders.

Trading volume on U.S. exchanges was slightly lower than the 20-day average, with declining issues outnumbering advancing ones on both the NYSE and Nasdaq.

In summary, Monday’s trading session was marked by concerns about interest rates, buoyed by positive manufacturing data, and ongoing speculation about the Federal Reserve’s policy stance.