*
U.S. manufacturing activity weak in March
*
Energy stocks jump as oil prices surge
*
Tesla drops after modest sequential sales growth
*
Closing print: S&P 500 +0.37%, Nasdaq -0.27%, Dow +0.98%
(Adds details after 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 6.1% 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 4.9% 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 more than 4%.
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.
The Dow was lifted in part by a 4.6% 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.
The S&P 500 climbed 0.37% to end the session at 4,124.49
points.
The Nasdaq declined 0.27% to 12,189.45 points, while the Dow
Jones Industrial Average rose 0.98% to 33,601.15 points.
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.
Across the U.S. stock market , advancing stocks
outnumbered falling ones by a 1.1-to-one ratio.
The S&P 500 posted 20 new highs and no new lows; the Nasdaq
recorded 85 new highs and 121 new lows.
Volume on U.S. exchanges was relatively light, with 10.9
billion shares traded, compared with an average of 12.7 billion
shares over the previous 20 sessions.
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(Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru
and by Noel Randewich in Oakland, California
Editing by Shounak Dasgupta and Matthew Lewis)
