US stocks closed lower on Monday as investors digested weaker-than-expected economic data ahead of next week’s Federal Reserve meeting.
The S&P 500 (^GSPC) fell 0.20%, the Dow Jones Industrial Average (^DJI) fell 0.59% or less than 160 points, and the Nasdaq Composite (^IXIC) fell below the flat line.
Meanwhile, the S&P 500 looked poised to enter a bull market in early morning trade but reversed course after the weak economic data. However, strong jobs numbers and passage of the US debt ceiling bill sent major indexes higher last week.
Crude oil prices rose, but pared previous gains, after Saudi Arabia said on Sunday it would cut its oil production by another million barrels per day starting in July. The world’s largest oil exporter is going it alone with the voluntary cut, as the Organization of the Petroleum Exporting Countries (OPEC+) and its allies agreed to stick to the current oil production target until 2024 at their meeting this weekend.
US benchmark West Texas Intermediate crude futures rose to $71.84 on Monday, while Brent crude futures, the global benchmark, fell to trade at $76.42 a barrel.
Meanwhile, Treasury yields lost some steam after a measure of US services showed a less optimistic tone for the economy, with the benchmark 10-year Treasury note rising to 3.7%. The ISM services PMI fell to 50.3 in May from 51.9 in April, the lowest reading since May 2020 and below expectations of 52.4.
The two-year yield fell to 4.48%, while the 30-year note traded up to 3.89%.
Elsewhere in economic news, data from United States Census Bureau It showed that new orders for US manufactured goods rose 0.4% in April from the previous month. That marked a slowdown from a downwardly revised 0.6% gain in March and missed economists’ expectations for a 0.8% increase.
Investors are closely watching economic data releases for clues as to whether the Fed will continue to raise interest rates. Markets pricing with 79% chance That the Fed will keep interest rates steady at its June 13-14 meeting, according to CME’s FedWatch tool.
Deutsche Bank’s Jim Reed wrote to clients Monday morning that the consumer price index for May, due for release on Tuesday, “might be the key thing turning these odds toward higher rates if the report is strong.”
“If the Fed wants to communicate subtly with the market one way or another before next week, the good media news could come out. But before the CPI, this doesn’t seem out of the question, as nothing will be 100% decided until then. However, We are back to feeling a fair amount of uncertainty about the Fed’s near-term outlook.”
Elsewhere, Apple Inc. (AAPL) announced its new hardware product Monday at its Worldwide Developers Conference, in Cupertino, California. Shares of the iPhone maker plunged after the highly anticipated release.
In other news, shares of Palo Alto Networks, Inc. rose. (PANW) up more than 4% on news that the stock will join the S&P 500 to replace Dish Network (DISH).
Separately, bitcoin (BTC-USD) fell below $26,000, after cryptocurrency exchange Binance Holdings and its founder Changpeng Zhao faced allegations of breaching US securities laws. Major cryptocurrency prices took a hit Monday amid a Securities and Exchange Commission lawsuit as shares of Coinbase Global, Inc. fell. (COIN) by more than 10%.
Shares of Palantir Technologies Inc. rose. (PLTR) increased by more than 4% after the data analytics software company said it was awarded a contract to provide the technology to the US Special Operations Command.
Danny Romero, Yahoo Finance correspondent. Follow her on Twitter @employee
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