US Stocks slip as yields move higher.
The US shares moved mostly lower on Monday, 01 April 2024, weighing the Dow and the S&P500 indexes down, while the tech-heavy Nasdaq managed to end the day in positive territory.
Wall Street main stock indexes turned lower as a report from the Institute for Supply Management unexpectedly showed modest growth in U.S. manufacturing activity in March contributed to a jump in Treasury yields and tempered expectations of a rate cut in June by the U.S. Federal Reserve.
Markets also digested the Commerce Department’s data on Friday that showed the personal consumption expenditures (PCE) price index – the Fed’s preferred inflation gauge – rose 0.3% in February. Fed Chair Jerome Powell said on Friday that the latest U.S. inflation data was “along the lines of what we would like to see,” but said since the economy was on a “strong” footing, “that means we don’t need to be in a hurry to cut.”
At the closing bell, the Dow Jones Industrial Average index declined 240.52 points, or 0.6%, to 39,566.85. The S&P500 index was down 10.58 points, or 0.2%, to 5,243.77. The tech-heavy Nasdaq Composite index increased by 17.37 points, or 0.11%, to 16,396.83.
Total 8 of 11 major S&P 500 sectors declined, with real estate being the bottom performer, down 1.77%, while the energy sector was the top performer, rising 1.1%, while the communication services sector was the top performer, rising 1.46%.
US ISM Manufacturing Index Indicates Growth For First Time Since September 2022- Following sixteen consecutive months of contraction, the Institute for Supply Management released a report on Monday unexpectedly showing modest growth in U.S. manufacturing activity in the month of March. The ISM said its manufacturing PMI jumped to 50.3 in March from 47.8 in February, with a reading above 50 indicating growth in the sector. With the much bigger-than-expected increase, the index returned to expansion territory for the first time since September 2022. The advance by the headline index partly reflected a significant turnaround by production, as the production index surged to 54.6 in March from 48.4 in February. The new orders index also returned to expansion territory, climbing to 51.4 in March from 49.2 in the previous month. The report said the employment index also rose to 47.4 in March from 45.9 in February, although the reading below 50 suggests employment contracted for the sixth month in a row. Meanwhile, the ISM said the prices index also jumped to 55.8 in March from 52.5 in February, as commodity-driven costs remain unstable.
US Business Output Growth Reaches 22-Month High In March- Signs of improving wider economic conditions and market demand fed through to a further expansion of US manufacturing production in March, with the rate of expansion hitting a 22-month high. The rate of job creation also quickened, but new order growth softened. Meanwhile, firms generally signaled a preference to draw down inventories amid sufficient holdings and efforts to improve cash flow. Purchasing activity and stocks of both inputs and finished goods were all scaled back following increases in February. On the inflation front, sharper rises in both input costs and output prices were registered. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers Index (#PMI) was above the 50.0 no-change mark for the third successive month in March, thereby signalling a further monthly strengthening in the health of the sector. That said, at 51.9 the index was down from 52.2 in February, pointing to a slightly less pronounced improvement at the end of the opening quarter of the year. Manufacturers recorded a solid and accelerated rise in production during March, with the rate of growth the sharpest in almost two years. Stronger demand was also evident in data for new orders, which showed an increase for the third month running. Input costs increased sharply, with the rate of inflation ticking up from that seen in February. Meanwhile, the impact of rising labor costs was mentioned as a factor pushing up selling prices at a number of manufacturers. Finally, suppliers’ delivery times shortened for the fourteenth time in the past 15 months, albeit only marginally.
US Construction Spending Unexpectedly Sees Further Downside In February- Construction spending in the U.S. unexpectedly saw further downside in the month of February, according to a report released by the Commerce Department on Monday. The report said construction spending dipped by 0.3% to an annual rate of $2.091 trillion in February after edging down by 0.2% to a revised rate of $2.097 trillion in January. The continued decrease came as a surprise to economists, who had expected construction spending to climb by 0.6% during the month. The unexpected decline largely reflected a steep drop in spending on public construction, which slumped by 1.2% to an annual rate of $474.4 billion. Spending on educational construction plunged by 1.8% to an annual rate of $100.5 billion, while spending on highway construction tumbled by 1.6% to a rate of $147.3 billion. Meanwhile, the Commerce Department said spending on private construction in February came in at an annual rate of $1.617 trillion, virtually unchanged from the revised January estimate. While spending on residential construction climbed by 0.7% to an annual rate of $901.1 billion, spending on non-residential construction slid by 0.9% to a rate of $716.0 billion.