While you were sleeping: UPDATED US manufacturing recovers, stocks pull back

Wall Street and US Treasurys moved lower as better-than-expected data on US manufacturing fuelled bets the Federal Reserve might raise interest rates this year.

An Institute for Supply Management report showed its index of national factory activity rose to 51.5 in September, up from 49.4 in August. A reading above 50 signals expansion. The September reading exceeded expectations from economists in separate Bloomberg and Reuters polls.

At the end of trading, the Dow Jones Industrial Average was down 54.30 points, or 0.3%, at 18,253.85. The Nasdaq Composite Index fell 0.2% to 5300.87 while the Standard & Poor's 500 Index slid 0.3% to 2161.20.

The Dow moved lower as declines in shares of Travelers and those of Procter & Gamble, down 1.5% and 1.4% respectively, outweighed gains in shares of DuPont and those of United Technologies, up 2% and 0.6% respectively.

US Treasurys dropped, pushing yields on the 10-year note two basis points higher to 1.624%. Investors are focused on this week's US jobs data, especially Friday's nonfarm payrolls report.

"Markets are warming up to the idea that the Fed is going to hike rates," John Canally, chief economic strategist at LPL Financial in Boston, told Bloomberg.

Crude oil rises
Energy shares fell even as US crude oil hung on to last week’s rally, settling up 1.2% at $US48.81 a barrel.

In corporate news, shares of Cabela's jumped, trading 14.7% higher at $US63 after the company said it agreed to be acquired by Bass Pro Shops in a deal valued at about $US5.5 billion. Bass Pro Shops will pay $US65.50 a share in cash, Cabela's said.

The US-listed shares of Deutsche Bank slid 2.1% as the German lender seeks to negotiate a settlement over the sale of residential mortgage securities with the Department of Justice.

A number of Deutsche Bank executives are due to be in the US this week in part for the International Monetary Fund's annual meeting in Washington.

In Europe, the Stoxx 600 Index ended the day with an advance of 0.1%. France's CAC 40 Index edged 0.1% higher, and the UK's FTSE 100 Index climbed 1.2%. German markets were closed for a holiday.

While UK stocks rose, the pound slid after Prime Minister Theresa May said she will start the two-year process to take the UK out of the European Union, or Brexit, by the end of March.

"Europe feels a little cautious," said Chris Beauchamp, a market analyst at IG in London, told Bloomberg.

"The market is taking cues from any newsflow around banks, and the problem was that there wasn't really anything concrete over the weekend. That means panic could still spike again and German stocks are ripe for some weakness. The FTSE 100 is in its own world with the lower pound, which might provide a useful dynamic going into the last quarter."

(BusinessDesk)

Click the hamburger symbol top right of our homepage to access the Rich List 2016 and other sections.