Stocks moved mostly lower over the course of the trading day on Monday, giving back some ground after showing a notable move to the upside last week. Disappointing manufacturing data inspired traders to cash in on some of the recent strength in the markets.
While the Nasdaq and the S&P 500 closed firmly in the red, strong gains by UnitedHealth (UNH) and AT&T (T) helped limit the downside for the Dow.
The Dow edged down 5.69 points or less than a tenth of a percent to 14,572.85, while the Nasdaq tumbled 28.35 points or 0.9 percent to 3,239.17 and the S&P 500 fell 7.02 points or 1,562.17.
The weakness on Wall Street came following the release of a report from the Institute for Supply Management showing a notable slowdown in the pace of growth in the manufacturing sector.
The ISM said its purchasing managers index fell to 51.3 in March from 54.2 in February, although a reading above 50 indicates continued growth in the manufacturing sector.
While the index pointed to the fourth consecutive month of growth in the sector, economists had expected a much more modest decrease to a reading of 54.0.
Jennifer Lee, senior economist at BMO Capital, said, "This could be the first sign that the impact of U.S. government budget cuts could be impacting business/manufacturing activity."
The disappointing manufacturing report overshadowed a separate report from the Commerce Department showing a notable rebound in construction spending.
The report said construction spending rose 1.2 percent to a seasonally adjusted annual rate of $885.1 billion in February from the revised January estimate of $874.8 billion. Economists had expected spending to increase by about 1.1 percent.
Profit taking also contributed to the pullback by stocks, with the Dow and the S&P 500 moving back to the downside after ending last Thursday's trading at record closing highs.
Airline stocks showed a substantial move to the downside over the course of the trading day, dragging the NYSE Arca Airline Index down by 2.3 percent. With the loss, the index pulled back further of the six-year closing high that it set last month.
Republic Airways (RJET) helped to lead the airline sector lower, with the regional airline tumbling by 9.5 percent on the day.
Significant weakness was also visible among semiconductor stocks, as reflected by the 2 percent loss posted by the Philadelphia Semiconductor Index. Micron Technology (MU) and NXP Semiconductors (NXPI) posted steep losses.
Brokerage stocks also came under considerable selling pressure, resulting in a 2 percent drop by the NYSE Arca Broker/Dealer Index.
Trucking, railroad, steel, and housing stocks also saw notable weakness, while health insurance stocks bucked the downtrend by the broader markets ahead of the announcement of Medicare Advantage rates for 2014.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with several markets closed for public holidays. Japan's Nikkei 225 Index tumbled by 2.1 percent, while South Korea's KOSPI Index edged up by 0.1 percent.
Meanwhile, the major European markets all remained closed on the day due to Easter holidays.
In the bond market, treasuries moved modestly higher on the day after moving to the downside in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.2 basis points to 1.84 percent.
Trading on Tuesday may be impacted by the release of the Commerce Department's report on February factory orders, although the data may be viewed as old news.
by RTT Staff Writer
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