The Dow Jones Industrial Average dipped Monday to kick off the second quarter, with traders weighing fresh U.S. inflation data amid fears the market rally could slow down.

The 30-stock Dow Jones Industrial Average lost 240.52 points, or 0.6%, and settled at 39,566.85. The S&P 500 dipped 0.2% to close at 5,243.77. The tech-heavy Nasdaq Composite, on the other hand, added 0.11% to finish at 16,396.83.

Investors remain cautious about the pace of the Federal Reserve's rate-cutting timeline this year and how soon central bankers will be able to meet their 2% inflation target. Federal Reserve Chair Jerome Powell said Friday that economic growth remains strong and inflation is still above target.

"That means we don't need to be in a hurry to cut," the central bank chief told public radio's "Marketplace" program. "The economy is strong right now, and the labor market is strong right now. And inflation has been coming down. We can and we will be careful about this decision because we can be." Indeed, fed funds futures data suggests a 58% probability that the central bank will cut rates at its June meeting, according to the CME FedWatch Tool.

Treasury yields rose Monday as investors considered Powell's earlier remarks and a key inflation reading. The benchmark 10-year Treasury yield was last up nearly 13 basis points at 4.319%.

Traders reacted to the personal consumption expenditures price index, released during the market's closure for Good Friday. Core PCE, which excludes food and energy, showed inflation rose 2.8% on a 12-month basis in February, in line with expectations. On a monthly basis, the measure was up 0.3% from a month ago, the Commerce Department said.

The major averages are coming off a winning first quarter. The S&P 500 jumped 10.2% for its best first-quarter performance since 2019, while the Dow Jones Industrial Average added 5.6%. The Nasdaq Composite popped 9.1%.

Wall Street also wrapped up a winning March, extending its rally to a fifth straight month. Those monthly and quarterly gains brought the Dow to within striking distance of 40,000. However, Monday's decline pulled it away from the milestone level.

"The market is overbought by any measure," said Quincy Krosby, chief global strategist at LPL Financial. "At some point, we will see a pullback, and then at that point, you'll start to hear the bears come out again suggesting that it's deeper than just a healthy correction."

"The market needs a correction in order to start seeing more money come in from money market accounts and to feel more constructive," Krosby added.

Correction: The S&P 500 had its best first-quarter performance since 2019. A previous version misstated the milestone.

Dow ends Monday more than 200 points lower

Stocks closed Monday mostly lower.

The S&P 500 dipped 0.2% to settle at 5,243.77. The 30-stock Dow Jones Industrial Average lost 240.52 points, or 0.6%, and settled at 39,566.85. The tech-heavy Nasdaq Composite, on the other hand, added 0.11% to finish at 16,396.83.

— Pia Singh

A 'rare combination' is boosting the global stock market, Bank of America says

The global economy and foreign stock markets are starting to wake up, according to Bank of America.

The U.S. was one of the few strong economies and markets in 2023, but that appears to be changing in the new year. Quant strategist Nigel Tupper said in a note to clients that the MSCI AC World Index is up more than 7% after the first quarter and that the "global wave," a compilation of economic indicators, is on the upswing.

Meanwhile, the Swiss National Bank lowered its benchmark interest rate last month, becoming the first of what is expected to be several major central banks to cut rates this year.

"The rare combination of improving data and easier policy is a powerful set up for global equity markets," the note said.

— Jesse Pound, Michael Bloom

Small caps struggle

Small-cap stocks got hit particularly hard during Monday's session.

The small-cap-focused Russell 2000 dropped 1% during afternoon trading. By comparison, the broad S&P 500 has lost just 0.3%.

The Russell 2000 has underperformed so far in 2024, gaining less than 4%, while the S&P 500 has added around 9%.

— Alex Harring

S&P 500 has been overbought for 50 consecutive trading days, Bespoke says

On Thursday afternoon, the S&P 500 settled at a new all-time record high.

That means the 500-stock index has now closed in on overbought territory for 50 consecutive trading days, according to a tweet from Bespoke Investment Group. In other words, it has been trading greater than one standard deviation away from its 50-day moving average for the last 50-day period.

This is the first time the S&P 500 has reached such a status in more than 25 years. The last time it notched a longer record of overbought closes was April 1998, with a 60-day streak.

— Lisa Kailai Han

Crypto stocks slide with bitcoin to kick off a busy quarter for digital assets businesses

Bitcoin fell to start the new month and quarter, dragging crypto equities down with it.

The price of the cryptocurrency was last lower by 3.5% at $68,477.88, according to Coin Metrics, as Treasury yields jumped and the dollar rose, following data that showed growth in the manufacturing sector for the first time since September 2022.

Crypto exchange Coinbase and software provider MicroStrategy, which largely trade as a proxy for the price of bitcoin, each fell about 5%. The largest mining stocks, Marathon Digital and Riot Platforms, lost 5% and 6%, respectively. CleanSpark, one of the best-performing miners this year, slid 10%.

April could be tumultuous for crypto-related stocks. Investors are looking toward the bitcoin halving, which will slash the reward and therefore revenue of bitcoin miners, in the second half of the month. The event could hurt the performance of miners but historically has set bitcoin up for rallies of 300% or more in the months that follow.

For more on what to expect in the weeks ahead, read our Q2 crypto outlook here.

— Tanaya Macheel

Dow underperforms

The Dow lagged on Monday, hurt by a group of stocks facing downward pressure.

The blue-chip average lost 0.7% during Monday afternoon trading. Meanwhile, the S&P 500 and Nasdaq Composite shed just 0.3% and 0.1%, respectively.

Home Depot led the 30-stock average into the red with a drop of more than 3%. Nike, Boeing and Honeywell were the next-biggest losers, with all three slipping more than 1.5%.

Less than a third of stocks in the index were trading higher shortly after 1 p.m. ET. However, 3M was the notable outperformer in the session with a nearly 5% advance.

— Alex Harring

Oil prices rise amid reports Iranian consulate hit by missile strike in Damascus

Crude oil futures rose on the first day of second-quarter trading Monday amid reports that the Iranian consulate in Damascus was hit by a missile strike.

The West Texas Intermediate contract for May delivery gained $1.28, or 1.54%, to $84.45 a barrel. The Brent contract for June delivery added 93 cents, or 1.07%, to $87.93 a barrel.

Syrian and Iranian state media said Monday that an Israel missile strike hit the Iranian consulate in Damascus. A Lebanese security source told Reuters that a senior commander in Iran's Revolutionary Guard Corps, Mohammad Reza Zahedi, was among the dead.

"This news, if confirmed, is a clear escalation of conflict in the Middle East and is likely to continue to bolster near-term oil prices," Leo Mariani, an analyst with Roth MKM, told clients Monday.

Communication services stocks outperform, lead S&P 500 sector

Communication services stocks outperformed on Monday, bucking the broader downtrend in the S&P 500.

The sector rallied 1.1% during afternoon trading. Megacap technology stocks contributed to a majority of the sector's gains, with Alphabet jumping more than 2% and Meta Platforms last up 1%. Take-Two Interactive, Netflix and Electronic Arts rose less than 1% each.

Energy was the second best-performing sector, adding 0.7%. Devon Energy and APA Corporation were the biggest gainers, rising nearly 2% each. Halliburton, Occidental Petroleum and Hess Corporation edged up more than 1%.

— Samantha Subin

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading.

• Micron Technology — Shares jumped more than 6% after Bank of America raised its price target on the chipmaker. The Wall Street firm expects demand for high-bandwidth memory technology will grow to more than $20 billion by 2027.
• Cameco — Shares rose more than 5% after Goldman Sachs initiated coverage of the uranium producer with a buy rating, saying there is more than 25% upside.
• Semtech — Shares advanced more than 6% after the semiconductor manufacturing company last week reported fourth-quarter revenue that beat expectations. Semtech posted revenue of $192.9 million, better than the FactSet consensus estimate of $190.7 million. It also reported a wider-than-expected loss of 6 cents per share, more than the loss of 4 cents per share analysts were expecting.

Read the full list here.

— Sarah Min

Trump Media shares tumble following net loss report

Trump Media & Technology Group tumbled more than 20% on Monday after reporting a net loss of $58.2 million in 2023.

In addition to the loss, Trump Media also reported total revenue of $4.1 million in 2023. By comparison, the company saw a net profit of $50.5 million and total revenue of $1.47 million in the prior year.

The company began trading under the ticker DJT — also the initials of former President Donald Trump — on the Nasdaq last week. Trump Media owns the Truth Social app.

— Alex Harring, Dan Mangan

Last quarter saw most record closes since 2013

The first quarter brought the largest share of record S&P 500 closes in more than a decade, according to Bespoke Investment Group data.

Nearly 2 out of every 5 trading days in the three-month period, or 39.3%, ended at new highs. It marks the largest percentage going back to the first quarter of 2013.

The broad index ended the quarter, which concluded last week, with a return of more than 10%.

— Alex Harring

Google's AI is underestimated by market, says Evercore ISI's Mahaney

Alphabet's work around generative artificial intelligence is getting unfairly pushed to the side by the market, according to Mark Mahaney, Evercore ISI's senior managing director.

Mahaney has a price target of $160 on the Google parent, implying an upside of about 6% from last week's close. He said the stock could trade as high as $200, which signals a rally of about 32.5% ahead.

"I think it's underappreciated as an AI asset," Mahaney said on CNBC's "Squawk Box." "I know we had some controversy … but the tool is extremely powerful."

There is lots of competition within the AI space, Mahaney acknowledged. But he noted that there are not actually that many challengers because of the high bar for resources needed to work at this scale.

"Google is in this race," he said. "But I think they're sort of more perceived by the market as Gen AI roadkill, rather than as a derivative play."

Mahaney said he would prefer Alphabet to Facebook parent Meta from a stock perspective. However, Amazon remains his top pick.

— Alex Harring

ISM manufacturing gauge tops expectations

Manufacturing in the U.S. expanded in March for the first time in 17 months, according to the ISM reading on the sector released Monday.

The ISM manufacturing index rose to 50.3, up from 47.8 in February and better than the 48.1 Dow Jones consensus estimate. The index measures the percentage of companies reporting expansion against contraction, so anything over 50 indicates growth.

Production posted the biggest gain, rising 6.2 points to 54.6, while prices also accelerated to 55.8, an increase of 3.3 points. The employment gauge increased 1.5 points but was still in contraction at 47.4.

— Jeff Cox

Stocks kick off the week little changed, with Nasdaq leading

Stocks opened Monday little changed.

The S&P 500 added 0.1%, while the Dow Jones Industrial Average was trading just below flat. The Nasdaq Composite, meanwhile, added 0.3%.

— Pia Singh

Powell sees no need to push rate cuts

Federal Reserve Chair Jerome Powell said Friday that recent economic data is giving policymakers a cushion as they contemplate when to begin cutting interest rates.

"That means we don't need to be in a hurry to cut," the Fed chief said during an interview at the San Francisco Fed with public radio's "Marketplace" program, according to a Reuters account. "You won't see us overreacting," he added.

The remarks came the same day that the Commerce Department's reading on the personal consumption expenditures price index showed a 12-month inflation rate of 2.5%, or 2.8% at core when excluding the volatile food and energy component. The Fed prefers the PCE gauge when it looks at inflation, and particularly focuses on the core level as a longer-term guide.

Powell said the report was "what we were expecting," and followed other readings on labor and broader growth that show the U.S. economy on solid footing. However, the Fed targets 2% inflation, meaning the current levels are on the high side.

— Jeff Cox

Stocks making the biggest moves premarket

Check out some of the companies making headlines in premarket trading.

• Micron Technology — Shares ticked up roughly 1.1% after Bank of America increased its price target on the chipmaker, with analysts forecasting high-bandwidth memory technology demand will grow to more than $20 billion by 2027.

• 3M — Shares of the manufacturer rose nearly 3% Monday. 3M completed its spinoff of health-care company Solventum and announced a $10 billion settlement with public water suppliers in a chemicals lawsuit that had received final approval.

• Devon Energy — The oil and gas producer added 1.4% on the back of a Wells Fargo upgrade to overweight from equal weight. Wells Fargo expects the company to turn a corner soon and says the stock is priced at a good entry point for investors.

Read the full list here.

— Brian Evans

Tesla shares tick higher after Model Y price increase

Tesla shares were up nearly 1% in the premarket after the company's website showed prices for Model Y vehicles in the U.S. had been increased by $1,000. The base model will cost $44,990, while the long range version is priced at $49,990.

Tesla has been under pressure amid waning EV demand, with the stock down nearly 30% year to date.

— Fred Imbert

Gold prices soar to record high on hopes of Fed cut

Gold prices extended their rally on Monday, scaling to a new record.

The optimism was helped by U.S. interest rate cut expectations and bullion's appeal as a safe haven asset.

Spot gold added 1.32% to trade at $2,265.53 per ounce. U.S. gold futures rose more than 2% to trade at $2,286.39 per ounce.

"I think it's a really exciting moment in gold," said World Gold Council's market strategist Joseph Cavatoni. "What's really driving it is, I think, many market speculators really getting that confidence and comfort [in] the Fed cuts," he said.

Gold prices tend to share an inverse relationship with interest rates.

— Lee Ying Shan

Japan's Nikkei 225 slips below 40,000

Japan's Nikkei 225 index fell 1.5% to last trade at 39,762.85, falling below the 40,000 mark for the first time in 12 days.

The index had rallied to 40,000 in early March and has hit multiple record highs since. It had even crossed 41,000 to hit an all-time high of 41,087.75 on March 22.

This comes after the Bank of Japan ended its negative interest rates regime in mid-March, along with other unconventional easing tools aimed at reflating Japan's economy.

The Japanese yen traded at 151.29 to the U.S. dollar after hitting a 34-year low of 151.97 last week.

— Shreyashi Sanyal

South Korea's factory activity slips into contraction in March

South Korea's factory activity slipped into contraction territory in March, following two straight months of expansion.

The country's purchasing manager's index came in at 49.8, down from 50.7 in February.

S&P Global wrote in its report that panel members largely attributed this to subdued demand and downgraded investment plans.

It also added that "a number of firms mentioned that sales remained muted amid weakness in the domestic economy in particular."

— Lim Hui Jie

Business sentiment among large Japan manufacturers falls slightly

Business optimism among large Japanese manufacturers fell in the first quarter, according to the Bank of Japan's Tankan survey, with the gauge at +11 compared with +12 in the last survey.

Economists polled by Reuters expected a +10 reading for large manufacturers.

However, optimism among nonmanufacturers rose to its highest level since August 1991, with the Tankan gauge at +34 compared with +30 in the fourth quarter and beating Reuters expectations of +33.

The Tankan survey is also monitored by the BOJ when formulating monetary policy.

— Lim Hui Jie

China's factory activity expands in March, surprising expectations

China's factory activity expanded in March, snapping a five-month streak in contraction territory and surprising expectations.

The country's manufacturing purchasing manager's index came in at 50.8, according to official data.

This compares with the 49.1 seen in February and the 49.9 expected by the Reuters poll, which represents a contractionary figure.

Separately, nonmanufacturing PMI rose to 53.0, up from the 51.4 seen in January.

— Lim Hui Jie

Where the major averages stand as the second quarter begins

Wall Street is coming off another winning quarter and month as excitement around artificial intelligence shows no signs of dwindling and investors are ready for the start of a Federal Reserve cutting cycle later this year.

Take a look at where the major averages stand as the second quarter kicks off.

Dow Jones Industrial Average:

• Rose 2.1% in March for its fifth straight winning month for the first time since August 2020
• Gained 5.6% in the first quarter

S&P 500:

• Added 3.1% in March
• Jumped 10.2% in the quarter for its best first-quarter performance since 2019

Nasdaq Composite:

• Edged up 1.8% in March
• Rallied 9.1% in the first quarter

— Samantha Subin, Chris Hayes

Stock futures open higher Sunday evening

Stock futures opened higher Sunday evening as Wall Street readied for the second quarter to begin.

Futures tied to the Dow Jones Industrial Average added 54 points, or 0.13%, while S&P 500 futures and Nasdaq-100 futures gained 0.2% and 0.3%, respectively.

— Samantha Subin