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U.S. manufacturing activity weak in March
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Energy stocks gain as oil prices surge
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Tesla falls after modest sequential sales growth
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Indexes mixed: Dow up 0.54%, S&P down 0.11%, Nasdaq down
0.91%
(Updates prices)
By Ankika Biswas and Amruta Khandekar
April 3 (Reuters) - The S&P 500 and the Nasdaq fell on
Monday as rising oil prices rekindled concerns that the U.S.
Federal Reserve will stick to its rate-hike campaign for longer
to temper inflation, while a slump in Tesla shares also
pressured the benchmark index.
Tesla Inc shed 6.1% on growing worries about the
electric-vehicle maker's profit margins after aggressive price
cuts led to only a modest increase in quarterly deliveries.
This, coupled with a near 1% fall in major technology stocks
and other growth shares such as Amazon.com Inc and
Microsoft Corp pushed information technology and consumer discretionary stocks to the bottom of the
S&P 500 sector indexes.
Saudi Arabia and other OPEC+ oil producers announced further
output cuts of around 1.16 million barrels per day, adding to
worries about an increase in price pressures, just days after
evidence of cooling inflation raised hopes that the Fed could
soon end its aggressive monetary tightening.
A 3.9% gain in energy major Chevron Corp on the jump
in oil prices and a 3.6% rise in UnitedHealth Group Inc on better-than-proposed Medicare Advantage rates for 2024,
helped stem losses on the S&P 500 and assisted the
price-weighted Dow Jones in outshining its peers.
The share value of a stock on Dow is proportional to its
influence on the index as opposed to the market
capitalization-weighted S&P 500.
Shares of other energy firms such as Exxon Mobil Corp and Occidental Petroleum Corp were also up 5.6%
and 4.2%, respectively. The energy sector climbed 4.4%
and was headed towards its steepest one-day gain in nearly a
year.
"What this (oil output cut) is doing is creating pretty
strong demand for energy-related stocks, which got pretty cheap
over the last few months," said George Cipolloni, portfolio
manager at Penn Mutual Asset Management.
Bets by traders were largely tilted toward a 25-basis point
rate hike in May, with odds of a pause at 44.3%, according to
CME Group's Fedwatch tool.
However, investors drew comfort from surveys by the
Institute for Supply Management and S&P Global that reflected
weakness in manufacturing activity in March.
"There's going to be this balance between inflation coming
off and then the potential for economic recession," said
Cipolloni.
At 11:30 a.m. ET, the Dow Jones Industrial Average was up 180.90 points, or 0.54%, at 33,455.05, the S&P 500 was down 4.57 points, or 0.11%, at 4,104.74, and the Nasdaq
Composite was down 111.35 points, or 0.91%, at
12,110.55.
U.S. stocks have weathered turbulence in the global banking
sector to notch gains in the first quarter, with the S&P 500
jumping 7%, while the tech-heavy Nasdaq recorded its strongest
first-quarter jump of 17% since mid-2020.
The quarterly earnings season is also around the corner,
with companies expected to start reporting results in the next
few weeks.
Declining issues outnumbered advancers for a 1.22-to-1 ratio
on the NYSE and a 1.66-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and no new low,
while the Nasdaq recorded 59 new highs and 73 new lows.
(Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru;
Editing by Arun Koyyur and Shounak Dasgupta)
