After a promising initial move upwards, stocks mainly declined throughout Monday's trading day. Both the Dow and the S&P 500 lost traction after achieving record closing highs last Thursday, whereas the tech-intensive Nasdaq closed with a minor increase.
Despite a small increase of 17.37 points or 0.1 percent which saw the Nasdaq rise to 16,396.83, the Dow fell by 240.52 points or 0.6 percent to 39,566.85, and the S&P 500 dropped 10.58 points or 0.2 percent to 5,243.77.
Wall Street's early strength was a response to the much-anticipated U.S. consumer price inflation data unveiled last Friday, which broadly met expectations. The Commerce Department reported that the annual consumer price growth rate rose to 2.5 percent in February, up slightly from 2.4 percent in January, correlating with predictions.
However, the annual growth rate of core consumer prices, excluding food and energy prices, decelerated to 2.8 percent in February, compared to 2.9 percent in January. Economists had anticipated this growth pace to remain stable at the initially reported 2.8 percent for the prior month.
In spite of inflation indications which the Federal Reserve reportedly prefers, trading activity remained somewhat underwhelming due to concerns surrounding inflation decelerating rapidly enough to warrant expected Fed interest rate cuts.
Share values took a knock when the Institute for Supply Management's report revealed unexpected modest growth in U.S. manufacturing activity in March, leading to Treasury yields rising. The manufacturing PMI rose to 50.3 in March, up from 47.8 in February, exceeding economists' expectations of 48.4 and marking manufacturing sector expansion for the first time since September 2022.
Airline stocks suffered substantial losses during the day trading, causing the NYSE Arca Airline Index to fall by 1.9 percent. This sector dropped following a three-month closing high last Thursday.
Commercial real estate stocks, vulnerable to interest rate shifts, also displayed notable weakness, with the Dow Jones U.S. Real Estate Index showing a 1.8 percent loss. Consequently, the Philadelphia Housing Sector Index and the NYSE Arca North American Telecom Index, housing and telecom stocks sensitive to interest rates, fell by 1.4 percent.
Downward drifts were also observed in banking, pharmaceutical, and brokerage stocks, while gold, computer hardware, and semiconductor stocks improved. Notably, Micron Technology (MU) saw a 5.5 percent surge after Bank of America raised its price target on the company's shares from $120 to $144.
In international markets, the Asia-Pacific region showed mixed results on Monday, with numerous major markets closed for holidays. Japan's Nikkei 255 Index dropped 1.4 percent, whereas China's Shanghai Composite Index rose by 1.2 percent. Meanwhile, the major European markets were closed for Easter Monday.
In the bond market, treasury bonds fell sharply in response to the latest U.S. economic data, causing an increase in the yield on the key ten-year note by 11.9 basis points to 4.325 percent.
Tuesday's trading may be influenced by reactions to reports on factory orders and job openings, along with comments from numerous Fed officials.
