Stocks pare losses after sliding on worries about the economy’s health
By Krystal Hur, CNN
New York (CNN) — Wall Street’s wild day ended on a calmer note.
The Dow slid 115 points, or 0.3%, on Monday after falling by more than 400 points earlier in the day. The S&P 500 rose 0.1% and the Nasdaq Composite added 0.6% to close out the first trading day of June.
That comes after the Institute for Supply Management manufacturing index clocked in at 48.7% in May, down from 49.2% in April. A reading below 50 indicates signs of contraction in the US manufacturing industry, while a reading above that level signals expansion.
“Today could mark a significant turning point in equity markets. In recent months, investors have cheered weaker-than-estimated data based on expectations that it could accelerate the start of the Fed’s policy loosening. Investors are now reacting to soft data with fear,” wrote José Torres, senior economist at Interactive Brokers, in a Monday note.
US Treasury yields fell on Monday. The 10-year yield declined to 4.4% as of 3 pm ET, according to Tradeweb.
Investors have in recent weeks grappled with data that suggests inflation is continuing to run hot while the economy is cooling. That has spurned concerns that the Federal Reserve will keep interest rates higher for longer than expected, in turn sending stocks swinging. Still, all major stock indexes in May cinched their sixth winning month in seven.
The Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, showed Friday that inflation stayed stubbornly high in March. PCE rose 0.3% on a monthly basis and 2.7% from the year prior, according to Commerce Department data.
New gross domestic product data released last Thursday showed that the US economy expanded at a weaker pace earlier this year than initially reported. The Commerce Department’s second estimate of first-quarter gross domestic product registered at a 1.3% annualized rate, below the 1.6% reflected in the first estimate, largely due to a downward revision to consumer spending.
“I don’t think we are going into a recession, but we are normalizing,” said Keith Lerner, chief market strategist at Truist.
Elsewhere, the New York Stock Exchange said Monday that a technical issue that halted trading for some stocks and caused Berkshire Hathaway shares to be down 99.97% has been resolved.
GameStop shares popped 21% on Monday after a Reddit post by Keith Gill, also known as “Roaring Kitty,” showing a screenshot of a stake in the video game stock worth nearly $116 million. GameStop shares surged more than 75% earlier in the day before paring their gains.
As stocks settle after the trading day, levels might change slightly.
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CNN’s Matt Egan contributed to this story.
