ISM manufacturing gauge falls to lowest since 2020
U.S. stocks eked out minor gains Monday, with the S&P 500 posting its highest close in more than 14 months in a holiday-shortened trading session as investors assessed whether a strong first-half rally dominated by megacap tech shares can broaden out.
Major U.S. stock exchanges closed at 1 p.m. ET, while the bond market will shut at 2 p.m. U.S. markets will be closed Tuesday for the Independence Day holiday.
What’s happening
- The Dow Jones Industrial Average DJIA, +0.03% rose 10.87 points, or less than 0.1%, to end at 34,418.47.
- The S&P 500 SPX, +0.12% gained 5.21 points, or 0.1%, to close at 4,455.59, its highest finish since April 20, 2022.
- The Nasdaq Composite COMP, +0.21% tacked on 28.85 points, or 0.2%, closing at 13,816.77, its highest finish since April 7, 2022.
Stocks posted gains Friday, with the Nasdaq Composite COMP, +0.21% posting a 31.7% first-half advance, its strongest since 1983. The S&P 500 SPX, +0.12% jumped 15.9%. The Dow DJIA, +0.03% lagged behind, up 3.8% for the first half.
What’s driving markets
Major indexes saw subdued moves as investors weighed data in holiday-thinned trade. An unexpected drop in a closely watched gauge of manufacturing activity raised questions about the resilience of the economy, analysts said.
The Institute for Supply Management’s manufacturing index fell to 46% in June from 46.9% in the prior month for its lowest reading since May 2020. Numbers below 50% signal contraction in the industrial side of the economy.
Economists polled by The Wall Street Journal had forecast the index to register 47.3% in June.
The decline is “difficult to square with claims from some commentators that economic growth is rebounding and provides further reason to suspect that a recession is on the horizon,” Andrew Hunter, deputy chief U.S. economist at Capital Economics, said in a note.
In other data, construction spending rose 0.9% in May, the Commerce Department said.
Meanwhile, investors may be excused for taking a pause after a strong first half of 2023, analysts said.
“With both global and U.S. stocks more than 20% above their October 2022 lows and a more challenging second-half outlook, we believe investors should position for more lackluster stock market performance through the remainder of the year,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in a note to clients.
The Nasdaq’s outsize gains were helped by hopes the economy has not been too badly damaged by the Federal Reserve’s sharp increase in borrowing costs as it battled to push inflation down from a multidecade high of 9.1% a year ago to the current 4%.
Large-cap technology stocks, like Apple Inc. AAPL, -0.78%, Microsoft Corp. MSFT, -0.75% and Nvidia Corp. NVDA, +0.26% have led the way. The Nasdaq-100 has jumped nearly 40%, adding nearly $5 trillion of value, according to Bloomberg.
The Nasdaq was lifted Monday as Tesla Inc. TSLA, +6.90% shares gained 6.9% after the electric-vehicle maker announced over the weekend higher-than-expected sales. Shares of rival EV-maker Rivian Automotive Inc. RIVN, +17.41% jumped more than 17% after the company announced second-quarter production and delivery data.
Companies in focus
- Shares of Tattooed Chef Inc. TTCF, -46.58%, a maker of plant-based food, plummeted 46.6%. The company said Friday that it plans to file for Chapter 11 bankruptcy protection and pursue a sale of its assets.
- Shares of Lucid Group Inc. LCID, +7.26% surged more than 7% Monday, logging a sixth-straight gain, as a broad rally in the stocks of fellow electric-vehicle makers helped distract investors from a downbeat analyst note.