Dow, S&P edge lower as manufacturing data lift Treasury yields Oil prices rise, WTI at 5-month closing high as market seen tight
NEW YORK — The Dow and the S&P 500 edged lower on Monday, dragged down by investor worries over the timing of interest rate cuts by the US Federal Reserve after stronger-than-expected manufacturing data pushed Treasury yields higher.
The Institute for Supply Management 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 twoyear Treasury yields jumped to two-week peaks following the manufacturing data.
The Dow Jones Industrial Average fell 240.52 points or 0.6% to 39,566.85; the S&P 500 lost 10.58 points or 0.2% to 5,243.77; and the Nasdaq Composite gained 17.37 points or 0.11% to 16,396.83.
The US 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,” Mr. Lerner added.
Key Fed officials — Governor Christopher Waller and Atlanta President Raphael Bostic — have said their preference is for fewer than three cuts this year.
Investors will get more clarity on the US central bank’s thinking this week, with 13 of 19 Fed officials speaking.
Also, the US monthly jobs report is due on Friday.
The majority of S&P 500 sectors were lower, with the real estate, healthcare, and utilities among the worst hit. The energy sector gained along with stronger crude oil prices.
Among the day’s decliners, AT&T shares slipped 0.6% after the US telecoms giant announced a massive data leak that affected current and former account holders.
Volume on US exchanges was 10.22 billion shares, compared with the 12 billion average for the full session over the last 20 trading days.
Declining issues outnumbered advancing ones on the NYSE by a 1.90-to-1 ratio; on Nasdaq, a 1.73to-1 ratio favored decliners. The S&P 500 posted 36 new 52-week highs and two new lows; the Nasdaq Composite recorded 97 new highs and 74 new lows. —
NEW YORK — Crude oil prices edged up about 1% on Monday with US futures closing at a fivemonth high, on expectations that economic growth in the US and China will boost demand, while supplies tighten on OPEC+ output cuts and attacks on Russian refineries.
Brent futures for June delivery settled at $87.42 a barrel on Monday, June’s first day as the front month. That was up about 42 cents or 0.5%, from the April 28 settlement price for the June contract. April 29 was the Good Friday holiday.
On April 28, the May Brent contract settled at a five-month high of $87.48 a barrel.
US West Texas Intermediate (WTI) crude futures gained 54 cents or 0.7%, to settle at $83.71, their highest close since Oct. 27.
The US diesel crack spread, which measures refining profit margins, narrowed to its lowest since May 2023 for a second day.
In the US, manufacturing grew in March for the first time in one and a half years, but employment at factories remained subdued amid “sizable layoff activity” and prices for inputs rose.
Last week, US Commerce department data showed the personal consumption expenditures (PCE) price index — the Fed’s preferred inflation gauge — largely moderated in February, with the cost of services outside housing and energy slowing significantly.
Most analysts said the moderation in the PCE price index should keep a June Fed rate cut on the table, which could boost economic growth and increase oil demand.
In China, manufacturing activity in March expanded for the first time in six months, according to an official factory survey. China is the world’s largest crude importer.
In Japan, optimism in the services sector climbed to a 33-year high in the first quarter on booming tourism and rising profits from price hikes, a central bank survey showed.
On the supply side, top oil exporter Saudi Arabia may raise the official selling price in May for flagship Arab Light crude after Middle East benchmarks strengthened last month, according to industry sources.
Russian Deputy Prime Minister Alexander Novak said the country’s oil companies will focus on reducing output rather than exports in the second quarter to evenly spread production cuts with other members of OPEC+, the Organization of the Petroleum Exporting Countries and allied producers. —