Shares decline due to concern over the economy's well-being on Wall Street.
The Dow lost 300 points, or 0.8%, and the S&P 500 dropped 0.3%, with the Nasdaq Composite gaining 0.1%. This comes after the Institute for Supply Management's manufacturing index hit 48.7% in May, a decrease from 49.2% in April. Anything below 50 implies contraction in the American manufacturing industry, while anything above it indicates growth.
José Torres, senior economist at Interactive Brokers, claims in a Monday memo that today could signal a substantial shift in equity markets. In recent months, investors have taken comfort in underwhelming data, anticipating it would trigger the beginning of the Federal Reserve's monetary easing. However, they're now reacting to weaker results with fear.
Investors have been concerned about data suggesting persistent high inflation while the economy slows. This worry has led to concerns that the Federal Reserve may keep rates elevated for a longer period than projected, leading to stock market volatility. Even so, all significant stock indexes managed to log gains in May for their sixth successful month in seven.
The Fed's preferred inflation metric, the Personal Consumption Expenditure price index (PCE), showed on Friday that inflation remained steady in March. The index increased by 0.3% on a monthly basis and 2.7% year-on-year, according to Commerce Department data.
The latest gross domestic product (GDP) figures published on Thursday revealed that the US economy grew at a slower rate in the first quarter than initially estimated. The Commerce Department's revised estimate of first-quarter GDP stands at a 1.3% annualized rate, down from the 1.6% predicted earlier, mainly because of a reduction in consumer spending.
Keith Lerner, chief strategist at Truist, remarked, "I don't think we are heading into a recession, but we're returning to normal."
Meanwhile, the New York Stock Exchange (NYSE) has resolved the technical issue that interrupted trading for some stocks and resulted in Berkshire Hathaway's share price crashing 99.97%.
Please note that this is an ongoing story and will be updated.
Matt Egan of CNN contributed to this report.
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Businesses and investors may be cautious when considering new investment opportunities due to ongoing economic concerns and stock market volatility. The worry of high inflation persisting while the economy slows has led some investors to fear that interest rates will remain elevated for longer than anticipated, potentially impacting stock market performance.
