Stocks Pull Back After Manufacturing Data

U.S. stocks pared their gains Tuesday after fresh data showed that U.S. manufacturing activity, while expanding, continues to be affected by rising commodities prices, materials shortages and difficulties in the labor market.

The S&P 500 was little changed, following a fourth consecutive monthly advance for the broad index. The Dow Jones Industrial Average rose about 105 points, or 0.3%. The technology-focused Nasdaq Composite traded lower, falling 0.2% after initially rising to the start the day.

All three major indexes were trading off from larger gains notched earlier in the session.

Investors have grown more confident that rising inflation won’t lead central banks to unwind stimulus measures, pushing major indexes back toward all-time highs in recent weeks. Data showing a jump in U.S. inflation had prompted markets to stutter earlier in May. The S&P 500 closed Friday at its third-highest level in history.

“The market is relatively sanguine about the inflationary pressure building,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds. “It is still a liquidity-driven equity market that is brushing off any bit of bad news,” he added, pointing to President Biden’s $6 trillion budget plan as the potential catalyst for further gains.

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