Stock market today: Wall Street slips as bond yields jump on surprisingly strong manufacturing data

NEW YORK (AP) — Most U.S. stocks fell Monday after a surprisingly strong report on the U.S. manufacturing sector cast doubt on how far interest rates can be cut this year.

The S&P 500 fell 10.58 points, or 0.2%, from its all-time high to finish at 5,243.77. The Dow Jones Industrial Average fell 240.52 points, or 0.6%, from its record high of 39,566.85. The Nasdaq Composite was an outlier, adding 17.37, or 0.1%, to 16,396.83.

FedEx fell 3.3% after saying it did not extend its contract with the US Postal Service to make deliveries. nationwide air cargowhich will end on September 29. Donald Trump's social media company, Trump media & Technology Group, lost more than a fifth of its value in another frenetic day of trading. The company, whose core business is the Truth Social platform, said it lost $58.2 million last year on just $4.1 million in revenue. Its shares fell 21.5%.

Universal Health Services sank 4%, one of the S&P 500's biggest losses. An Illinois jury awarded $535 million in damages to a patient who alleged negligence in a sexual assault case involving another patient, he said. . The company said it has insurance to cover part of the amount, but the final resolution of the case could end up having a material effect on its finances.

Newmont helped keep losses under control. The miner's shares rose 1.6% as the price of gold continues to break records.

In the bond market, Treasury yields soared after a report said the U.S. manufacturing sector unexpectedly returned to growth last month. It broke a 16-month contraction streak, according to the Institute for Supply Management.

It's the latest evidence showing that the U.S. economy remains strong despite high interest rates. This is positive for the stock market because it can drive earnings growth for companies. But it can also maintain upward pressure on inflation. That, in turn, could mean a more hesitant Federal Reserve when it comes to the interest rate cuts that investors crave.

Following the manufacturing data, Wall Street traders briefly reduced their bets on the first rate cut coming in June. That's still a "reasonable basis" expectation, according to Deutsche Bank economists, but they say tough statements from Fed officials recently could signal that interest rates will stay high longer than previously thought.

The Federal Reserve has raised its main rate to the highest level since 2001 to slow the economy and hurt investment prices enough to control inflation. Expectations of upcoming cuts have been one of the main reasons why the S&P 500 soared more than 20% between October and March.

Several economic reports will be offered this week that could influence the Federal Reserve's thinking, including updates on job openings across the country and the strength of U.S. service companies. The headline comes Friday, when economists expect a report to show that hiring cooled slightly last month.

A slowdown would be welcome on Wall Street, where the hope is that the economy remains strong, but not so strong that it drives inflation. Inflation is milder than at its peak almost two years ago. But progress has become more rugged recently, with reports this year entering hotter than expected.

Federal Reserve Chairman Jerome Powell said again on Friday that the central bank is waiting to get "more good inflation readings" before cutting interest rates this year. It has remained with an outlook for three rate cuts in 2024.

On Friday, a report said Inflation behaves as expected., at least by the measure the Federal Reserve prefers to use. Both the US bond and stock markets were closed that day.

Wall Street traders now largely see three cuts as the most likely possibility this year, after previously forecasting more, but some bets shifted toward the possibility of fewer cuts following the morning's better-than-expected manufacturing data. .

In the bond market, the 10-year Treasury yield jumped to 4.31% from 4.21% late Thursday. The two-year yield, which more closely tracks the Federal Reserve's expectations, rose to 4.71% from 4.63%.

In foreign stock markets, the Nikkei 225 in Tokyo fell 1.4% after a Bank of Japan Quarterly Survey on trading conditions showed that confidence among large manufacturers declined for the first time in a year.

In China, stocks gained 1.2% in Shanghai after polls suggested the country manufacturing industry It is getting stronger.

In Europe, stock markets were closed for holidays.


AP Business writers Matt Ott and Elaine Kurtenbach contributed.

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