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Chip stocks advance; semiconductor index up 1.2%

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AT&T ( T ) down after reporting data leak

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Indexes: Dow down 0.6%, S&P 500 down 0.2%, Nasdaq up 0.1%

(Updates to 1615 ET)

By Chibuike Oguh

NEW YORK, April 1 (Reuters) - The Dow and S&P 500 edged

lower on Monday, dragged down by investor worries over the

timing of interest rate cuts by the Federal Reserve after

stronger-than-expected manufacturing data pushed Treasury yields

higher.

The Institute for Supply Management (ISM) said its

manufacturing PMI increased to 50.3 last month, the highest and

first reading above 50 since September 2022, from 47.8 in

February. It suggested the manufacturing sector, which has been

battered by higher interest rates, was recovering.

The Nasdaq closed slightly higher, along with the S&P 500

technology sector. An index of semiconductors

jumped 1.2%.

"If the economy is still somewhat strong and now that

PMI data is starting to move up, that just suggests there could

be some upside pressure in yields," said Keith Lerner, chief

market strategist at Truist Wealth in Atlanta.

Benchmark 10-year and two-year Treasury yields jumped to

two-week peaks following the manufacturing data.

The Dow Jones Industrial Average fell 240.52 points,

or 0.60%, to 39,566.85, the S&P 500 lost 10.58 points, or

0.20%, to 5,243.77 and the Nasdaq Composite gained 17.37

points, or 0.11%, to 16,396.83.

The U.S. rate futures market was pricing in a 58% chance of

a rate cut in June, down from about 64% a week ago, according to

the CME's FedWatch tool.

"We would prefer a stronger economy with less rate cuts than

a weaker economy with more rate cuts, but, on a short term

basis, the narrative has moved to about three rate cuts," Lerner

added.

Key Fed officials - Governor Christopher Waller and Atlanta

President Raphael Bostic - have said their preference is for

fewer than three cuts this year.

Investors will get more clarity on the U.S. central bank's

thinking this week, with 13 of 19 Fed officials speaking.

Also, the U.S. monthly jobs report is due on Friday.

The majority of S&P 500 sectors were lower, with the real

estate, healthcare, and utilities

among the worst hit. The energy sector gained along with

stronger crude oil prices.

Among the day's decliners, AT&T ( T ) shares slipped 0.6%

after the U.S. telecoms giant announced a massive data leak that

affected current and former account holders.

Volume on U.S. exchanges was 10.22 billion shares, compared

with the 12 billion average for the full session over the last

20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a

1.90-to-1 ratio; on Nasdaq, a 1.73-to-1 ratio favored decliners.

The S&P 500 posted 36 new 52-week highs and 2 new lows; the

Nasdaq Composite recorded 97 new highs and 74 new lows.