Stock Market Today: S&P500 begins Q2 in red as spiking Treasury yields blunt bulls

Investing.com -- The S&P 500 started the second-quarter on the back foot Monday as surging Treasury yields kept bullish bets at bay after a surprise expansion in manufactory activity underscored the strength in the economy and cooled investor expectations for sooner rather than later Federal Reserve rate cuts.  

At 16:00 ET (21:00 GMT), the S&P 500 fell 0.3%, the NASDAQ Composite gained 0.1%, and the Dow Jones Industrial Average was down 240 points, or 0.6%.

Treasury yields rise as manufacturing activity unexpectedly expands

The yield on the 2-year Treasury, which is sensitive to Fed policy, jumped 9 basis points to 4.712% after the ISM manufacturing purchasing managers' Index unexpectedly rose to a reading of 50.3 from 47.8. The index reading pushed above 50, which indicates an expansion in manufacturing, for the first time since Sept. 2022. 

The prices paid component of the index, a gauge of inflation, jumped to 55.8 from 52.5, signalling "raw material prices rose at their fastest pace since July 2022," Oxford Economics. 

The data supported Fed chairman Powell message on Friday that the Fed doesn't need to rush to cut rates amid signs of a strong economy. 

"We don’t need to be in a hurry to cut," Powell said Friday at a San Francisco Fed event. “The fact that the U.S. economy is growing at such a solid pace, the fact that the labor market is still very, very strong, gives us the chance to just be a little more confident about inflation coming down before we take the important step of cutting rates.”

The odds of a June cut were not seen at 56% from 64% last week, according to Investing.com's Fed Rate Monitor Tool.

Microsoft continues to ride AI wave, Alphabet shines on Jefferies backing; Micron in rally mode

Microsoft (NASDAQ:MSFT) rose nearly 1% as the tech giant plans to begin offering its chat and video app, Teams, as a standalone product, separating it from its Office suite on a global scale, Reuters reported on Monday. 

It comes six months after the tech giant initiated a similar separation in Europe, responding to regulatory scrutiny over its product bundling practices.

Alphabet Inc Class A (NASDAQ:GOOGL), meanwhile, closed 3% higher after Jefferies touted optimism on the stock amid expectations that the company is likely to address several investor concerns including the "AI threat," to its advertising business and cloud revenue that has lagged rival Amazon (NASDAQ:AMZN)'s AWS.

Alphabet's Google also agreed to amend to its disclosures related to private, or "incognito," browsing data to settle a part of a lawsuit that alleged the company collected users' data without consent.

In chip stocks, meanwhile, Micron Technology Inc (NASDAQ:MU) rallied more than 5% after  Bank of America hiked its price on the chipmaker to on expectations for a surge in demand for memory chips to feed the AI revolution.  

Tesla (NASDAQ:TSLA) $1,000 price hike for all its Model Y variants in the United States took effect on Monday. The price hikes come amid waning demand and strong competition in China. 

The announcement comes as the electric-vehicle maker is expected to report weak quarterly sales as early as Tuesday amid rising competition from cheaper rivals like China’s BYD (SZ:002594).

Trump Media&Technology Group Corp (NASDAQ:DJT) fell 21% after reporting a net loss of $58.2 million compared with a profit of $50.52M a year earlier. 

AT&T Inc (NYSE:T) fell 0.6% after confirmed that data on about 73 million current and former customers may have been leaked on the dark web.