Stocks Pull Back After Manufacturing Data -- Update
June 01 2021 - 4:26PM
Dow Jones News
By Joe Wallace and Caitlin McCabe
U.S. stocks wavered Tuesday as fresh data showed that U.S.
manufacturing activity, while expanding, continues to be affected
by rising commodities prices, materials shortages and difficulties
in the labor market.
The S&P 500 was off 0.1% as of the 4 p.m. close of trading
in New York, following a fourth consecutive monthly advance for the
broad index. The technology-focused Nasdaq Composite retreated
0.1%.
The Dow Jones Industrial Average rose about 44 points, or
0.1%.
All three major indexes were trading off from larger gains
notched earlier in the session.
Investors have grown more confident that rising inflation won't
lead central banks to unwind stimulus measures, pushing major
indexes back toward all-time highs in recent weeks. Data showing a
jump in U.S. inflation had prompted markets to stutter earlier in
May. The S&P 500 closed Friday at its third-highest level in
history.
"The market is relatively sanguine about the inflationary
pressure building," said Brian O'Reilly, head of market strategy
for Mediolanum International Funds. "It is still a liquidity-driven
equity market that is brushing off any bit of bad news," he added,
pointing to President Biden's $6 trillion budget plan as the
potential catalyst for further gains.
Still, other headwinds weigh on stocks. Valuations for some
companies look high, particularly among growth and technology
stocks, while investors have become increasingly concerned about
elevated commodities prices, as well as supply chain setbacks and
an uneven labor market recovery.
On Tuesday, the Institute for Supply Management said its
purchasing-managers index of manufacturing activity picked up in
May, registering at 61.2, versus 60.7 in April. The figure exceeded
analyst expectations as demand boosted new orders. But the report
also indicated that the U.S. manufacturing economy is grappling
with record-long lead times, transportation bottlenecks, shortages
of critical basic materials and worker absenteeism.
Shares of economically sensitive stocks were among those that
rallied Tuesday, with energy and materials companies helping lead
the market higher. Marathon Oil rallied 14%, while Boeing added
3.1% and Capital One Financial gained 3%. Technology stocks
including Twitter and Microsoft pulled back, with each losing 3%
and 0.7%, respectively.
In corporate news, shares of Cloudera jumped 24%. Private-equity
firms KKR and Clayton Dubilier & Rice agreed to buy the
software company for roughly $5.3 billion in a deal that would take
Cloudera private.
AMC Entertainment, a popular stock among individual traders,
added 19%. The movie-theatre operator said it had sold new shares
valued at $230.5 million to Mudrick Capital Management, raising
cash at a premium to its closing stock price from Friday.
Other favorites among amateur investors rallied, including
cannabis company Sundial Growers, which rose 4.2%. Videogame
retailer GameStop added 1
In the bond market, the yield on the 10-year Treasury note edged
up to 1.612%, from 1.592% Friday. Yields, which rise when bond
prices fall, have waffled around the 1.6% mark since mid-April.
Brent-crude futures, the benchmark in international energy
markets, rose 1.3% to $70.20 a barrel, putting them on track to
close above $70 for the first time since May 2019. Prices have been
bolstered by a decline in global stockpiles of oil that ballooned
in the early stages of the pandemic.
Members of the Organization of the Petroleum Exporting Countries
and their allies agreed Tuesday to pump more oil starting in
July.
In overseas markets, the Stoxx Europe 600 rose 0.7%. The
Shanghai Composite Index rose 0.3%, and Japan's Nikkei 225 ticked
down 0.2%.
Write to Joe Wallace at Joe.Wallace@wsj.com and Caitlin McCabe
at caitlin.mccabe@wsj.com
(END) Dow Jones Newswires
June 01, 2021 16:17 ET (20:17 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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