Dow, S&P close lower as manufacturing data lifts yields
Dow and S&P 500 edged lower on Monday, dragged down by investor worries over the timing of interest rate cuts by the Federal Reserve after stronger-than-expected manufacturing data pushed Treasury yields higher.
The Institute for Supply Management (ISM) said its manufacturing PMI increased to 50.3 last month, the highest and first reading above 50 since September 2022, from 47.8 in February. It suggested the manufacturing sector, which has been battered by higher interest rates, was recovering.
The Nasdaq closed slightly higher, along with the S&P 500 technology sector. An index of semiconductors jumped 1.2%.
«If the economy is still somewhat strong and now that PMI data is starting to move up, that just suggests there could be some upside pressure in yields,» said Keith Lerner, chief market strategist at Truist Wealth in Atlanta.
Benchmark 10-year and two-year Treasury yields jumped to two-week peaks following the manufacturing data.
The Dow Jones Industrial Average fell 240.52 points, or 0.60%, to 39,566.85, the S&P 500 lost 10.58 points, or 0.20%, to 5,243.77 and the Nasdaq Composite gained 17.37 points, or 0.11%, to 16,396.83.
The U.S. rate futures market was pricing in a 58% chance of a rate cut in June, down from about 64% a week ago, according to the CME's FedWatch tool.
«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,» Lerner added.
Key Fed officials — Governor Christopher
