Closing Stock Market Summary
Today's session featured a mostly negative bias. It was the first trading day of the new quarter following a stellar start to the year for many stocks, which contributed to the overall negative vibe. Declining issues outpaced advancing issues by a roughly 2-to-1 margin at both the NYSE and at the Nasdaq.
The Russell 2000, which outperformed other major indices last week, dropped 1.0% today. The S&P 500 and Dow Jones Industrial Average fell 0.2% and 0.6%, respectively. The Nasdaq Composite, meanwhile, eked out a 0.1% gain thanks to gains some mega caps and relative strength in the semiconductor space. The PHLX Semiconductor Index (SOX) jumped 1.2%.
The downside pressure seen elsewhere in the stock market was in response to a sharp increase in market rates. The 10-yr note yield jumped 12 basis points to 4.33% and the 2-yr note yield rose 10 basis points to 4.72%.
Treasuries were reacting to some economic data that didn't exactly corroborate the market's thinking in terms of rate cuts by the FOMC. The February Personal Spending and Income report, released Friday when markets were closed, showed some sticky inflation figures and this morning's ISM Manufacturing data was stronger than expected.
Eight of the 11 S&P 500 sectors settled with losses, but only one sector fell more than 1.0%. The rate-sensitive real estate sector was the top laggard, dropping 1.8% in response to the activity in Treasuries. Meanwhile, gains in Meta Platforms (META 491.35, +5.77, +1.2%) and Alphabet (GOOG 156.50, +4.24, +2.8%) helped propel the communication services sector to a 1.5% gain.
The energy sector was another top performer today, gaining 0.8%. It benefitted from positive action in Chevron (CVX 159.08, +1.34, +0.9%) and Exxon Mobil (XOM 116.99, +0.75, +0.7%), along with commodity prices. WTI crude oil futures settled 0.8% higher at $83.94/bbl and natural gas futures jumped 5.1% to $1.85/mmbtu.
- S&P 500:+9.9% YTD
- Nasdaq Composite: +9.2% YTD
- S&P Midcap 400: +8.8% YTD
- Dow Jones Industrial Average: +5.6% YTD
- Russell 2000: +3.7% YTD
Reviewing today's economic data:
- The S&P Global US Manufacturing Index dropped to 51.9 in the final March reading from 52.2.
- The March ISM Manufacturing Index checked in at 50.3% (consensus 48.5%), up from 47.8% in February. That is the first reading above 50.0% since September 2022, which equates to a manufacturing sector operating in an expansion mode.
- The key takeaway from the report is that it contained all the reasons why the Fed believes it can be patient before cutting rates: business activity is expanding, prices are sticking at higher levels, and employment conditions remain reasonably good.
- Total construction spending decreased 0.3% month-over-month in February (consensus 0.6%) following an unrevised 0.2% decline in January. Total private construction was flat month-over-month while total public construction was down 1.2% month-over-month. On a year-over-year basis, total construction spending was up 10.7%.
- The key takeaway from the report is that new single-family construction remains an important prop for overall construction spending, but the pickup there in February wasn't enough to offset a decent-sized decline in nonresidential spending in both the private and public sectors.
Looking ahead, Tuesday's economic calendar features February Factory Orders and the February JOLTS - Job Openings at 10:00 ET.