On Monday, April 1st, both the Dow Jones Industrial Average and the S&P 500 Index declined as investors worried about the timing of Federal Reserve interest rate cuts, as stronger-than-expected manufacturing data pushed up Treasury yields.

The Institute for Supply Management (ISM) reported that its Manufacturing Purchasing Managers' Index rose to 50.3 last month, the first reading above 50 since September 2022 and the highest reading, compared to February's 47.8. This indicates that the industrial sector, which has been hit by continually rising borrowing rates, is rebounding.

The Nasdaq Composite Index closed slightly higher, while the S&P 500 Technology sector also saw slight gains. The semiconductor index rose by 1.2%.

Keith Lerner, Chief Market Strategist at Truist Wealth in Atlanta, stated, "If the economy remains relatively robust and purchasing manager index data begins to rise, that suggests there could be some upward pressure on yields."

According to manufacturing data, benchmark 10-year and two-year Treasury yields rose to two-week highs.

The Dow Jones Industrial Average fell by 240.52 points, or 0.60%, to 39,566.85 points, the S&P 500 Index declined by 10.58 points, or 0.20%, to 5,243.77 points, and the Nasdaq Index rose by 17.37 points, or 0.11%, to 16,396.83 points.

The FedWatch tool from the Chicago Mercantile Exchange showed that the U.S. interest rate futures market is predicting a 58% chance of a rate cut in June, down from about 64% a week ago.

Lerner added, "We would rather see a stronger economy with smaller rate cuts than a weaker economy with larger rate cuts, but in the medium term, the situation has shifted to expecting about three rate cuts."

Key Federal Reserve officials, including Federal Reserve Chairman Christopher Waller and Atlanta Federal Reserve Bank President Raphael Bostic, have indicated they hope for fewer than three rate cuts this year.

This week, 13 out of 19 Federal Reserve officials will speak, providing investors with additional clarity on the Fed's thinking, with U.S. monthly employment data set to be released on Friday.

Most sectors of the S&P 500 Index declined, with real estate, healthcare, and utilities being among the hardest hit. The energy sector benefited from rising crude oil prices.

Shares of U.S. telecom company AT&T (NYSE: T) fell by 0.6% as the company reported a significant data breach affecting current and past account holders.

Trading volume on U.S. exchanges was 10.22 billion shares, slightly lower compared to the average volume of the previous 20 trading days.

On the New York Stock Exchange, the ratio of declining stocks to advancing stocks was 1.90 to 1, while on the Nasdaq, the ratio was 1.73 to 1, favoring declining stocks.

The S&P 500 Index had 36 new 52-week highs and 2 new lows, while the Nasdaq Composite Index recorded 97 new highs and 74 new lows.