U.S. stock indexes eased from intraday record highs on Monday, dragged down by Microsoft and other mega-cap technology stocks, while data showed U.S. manufacturing activity slowed in October amid supply chain disruptions.
All the major indexes had scaled new peaks earlier in the session, with the blue-chip Dow hitting 36,000 points for the first time.
The Institute for Supply Management (ISM) said its index of national factory activity slipped to a reading of 60.8 last month, as a measure of new orders dropped to a 16-month low and factories continued to experience delays with deliveries of raw materials.
The report came ahead of the Federal Reserve’s policy meeting on Nov. 2–3, when the central bank is expected to announce the tapering of its $120 billion monthly bond buying program amid rising price pressures.
Still, investors have looked past a mixed macro economic picture, helped by a largely upbeat earnings season.
“We had a little bit of chasing this morning and now that’s coming off. This market keeps getting driven by the likes of Tesla really,” said Dennis Dick, a trader at Bright Trading LLC.
“People believe that we’re going to be strong into the year end and so they’re chasing the winners. It’s a momentum market right now, where what is hot is hot and what is not is not.”
Five of the 11 major S&P sectors advanced, with energy shares rising more than 1 percent.
Tesla Inc. rose 1.2 percent to a record high after it notched a trillion dollars in market capitalization last week, while Meta Platforms , formerly Facebook Inc., added 2.7 percent to provide the biggest boost to the S&P 500 and the Nasdaq.
At 10:36 a.m. ET, the Dow Jones Industrial Average was up 28.06 points, or 0.08 percent, at 35,847.62, the S&P 500 was down 4.41 points, or 0.10 percent, at 4,600.97, and the Nasdaq Composite was up 20.71 points, or 0.13 percent, at 15,519.10.
Other mega-cap technology stocks Google-owner Alphabet Inc., Microsoft Corp., Amazon.com, and Apple Inc. slipped between 0.9 percent and 1.2 percent to weigh the most on the S&P 500 and the Nasdaq.
The market has also started pricing in rate hikes next year. November and December tend to be among the strongest months for stocks and any hawkish tilt in the Fed’s message could catch equities by surprise.
Goldman Sachs has brought forward its forecast by a year to July 2022 for the first post-pandemic U.S. interest rate hike, as the investment bank expects inflation to remain elevated.
Harley-Davidson Inc. jumped 7.9 percent after the European Union removed retaliatory tariffs on U.S. products including whiskey, power boats, and company’s motorcycles.
Newell Brands gained 1.2 percent after J.P. Morgan upgraded the Sharpie pen maker’s stock to “overweight” from “neutral.”
Advancing issues outnumbered decliners by a 2.53-to-1 ratio on the NYSE and by a 2.72-to-1 ratio on the Nasdaq.
The S&P index recorded 40 new 52-week highs and two new lows, while the Nasdaq recorded 151 new highs and 28 new lows.
By Devik Jain and Bansari Mayur Kamdar