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U.S. manufacturing activity weak in March
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Energy stocks jump as oil prices surge
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Tesla drops after modest sequential sales growth
(Adds details on end of session)
By Noel Randewich and Ankika Biswas
April 3 (Reuters) - The S&P 500 ended higher on Monday,
lifted by energy stocks following surprise cuts to the OPEC+
group's oil output targets, while Tesla tumbled after its
electric vehicle deliveries for the first quarter disappointed
investors.
Tesla Inc dropped after disclosing March-quarter
deliveries rose just 4% from the previous quarter, even after
CEO Elon Musk slashed car prices in January to boost demand.
The S&P 500 energy sector index surged after Saudi
Arabia and other OPEC+ oil producers announced unexpected output
cuts that could push oil prices toward $100 a barrel. Chevron
Corp , Exxon Mobil Corp and Occidental Petroleum
Corp all rallied strongly.
However, the prospect of higher oil costs added to inflation
worries on Wall Street just days after evidence of cooling
prices raised expectations that the U.S. Federal Reserve might
soon end its aggressive monetary tightening campaign.
"The decision to cut production is a headwind for inflation
... and that's why, on balance we're seeing a generally 'risk
off' bias," said Terry Sandven, chief equity strategist at U.S.
Bank Wealth Management in Minneapolis.
Heavyweight tech-related stocks Microsoft Corp , Amazon.com Inc and Nvidia Corp fell, giving back some of their gains in a strong first quarter. The Dow was lifted in part by a rally in UnitedHealth Group Inc on better-than-proposed Medicare Advantage rates for 2024. Investors worried about inflation drew comfort from surveys by the Institute for Supply Management and S&P Global that reflected weakness in manufacturing activity in March. Interest rate futures imply 56% odds the Fed will raise rates by 25 basis points at its meeting in May, and 44% odds it will keep interest rates unchanged, according to CME Group's Fedwatch tool. According to preliminary data, the S&P 500 gained 14.60 points, or 0.36%, to end at 4,123.91 points, while the Nasdaq Composite lost 33.03 points, or 0.27%, to 12,188.88. The Dow Jones Industrial Average rose 322.85 points, or 0.97%, to 33,597.00. Despite turbulence in the global banking sector, the S&P 500 jumped 7% in the first quarter and the tech-heavy Nasdaq rallied 17%. First-quarter earnings season is around the corner, with big banks among the first to report in coming weeks and offer details about the sector's overall health after the March collapse of Silicon Valley Bank sparked a fears of a broader industry crisis. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ S&P 500's busiest trades ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru and by Noel Randewich in Oakland, California Editing by Shounak Dasgupta and Matthew Lewis)
