US close: Stocks start June in negative territory

dl wall street st new york city nyc nyse stock exchange ny dow jones nasdaq sp finance us usa united states of america — Wall StreetSharecast photo / Josh White

Stocks on Wall Street closed below the waterline on the first trading day of June, as investors digested the release of the Federal Reserve's Beige Book, which suggested the American economy was slowing its pace in some areas.

The Dow Jones Industrial Average ended the session down 0.54% at 32,813.23, as the S&P 500 lost 0.75% to 4,101.23 and the Nasdaq Composite was off 0.72% at 11,994.46.

“President Biden’s comments on giving Powell room to combat inflation seem to be overwhelming the hope that the Fed might pause its hiking moves towards the end of the summer,” said IG chief market analyst Chris Beauchamp earlier.

“These were probably misplaced anyway, but they were enough to drive last week’s bounce.

“While the Dow is still above last Thursday’s open, before it really took off into the weekend, and for now is also above the mid-May high, the sight of White House and Fed arm-in-arm means there won’t be much pressure on the FOMC to become more dovish any time soon.”

The latest Beige Book report from the Fed, released late in the session, suggested that growth was starting to slow in parts of the US economy.

Serious inflationary pressures and rising interest rates saw some businesses surveyed by the central bank report fresh caution amid an increasingly uncertain outlook.

“Four districts explicitly noted that the pace of growth had slowed since the prior period,” the report read.

“Eight districts reported that expectations of future growth among their contacts had diminished; contacts in three districts specifically expressed concerns about a recession.”

Elsewhere on the economic front, the Institute for Supply Management's manufacturing sector purchasing managers' index came in ahead of forecasts earlier.

The headline PMI improved to 56.1 in May, from a reading of 55.4 for April and ahead of consensus expectations for 55.0.

In equities, Hovnanian Enterprises surged 11.02% after the housebuilder reported that its adjusted earnings roughly tripled during the second quarter on the back of stronger gross margins.

Salesforce rocketed 9.88% after the customer relationship software developer raised its guidance for full-year earnings per share to between $4.74 and $4.76, and hiked its non-GAAP operating margin expectations to 20.4% from 20%.

On the downside, Facebook owner Meta Platforms was 2.58% weaker after chief operating officer Sheryl Sandberg announced she would step down after 14 years with the company.

Delta Air Lines descended 5.16% despite the legacy carrier raising its revenue expectations, as it continued to grapple with a fresh effort to unionise its cabin crew.

Reporting by Josh White at Sharecast.com. Additional reporting by Alexander Bueso.

Dow Jones - Risers

Salesforce.Com Inc. (CRM) $176.07 9.88%
Chevron Corp. (CVX) $176.33 0.95%
Caterpillar Inc. (CAT) $217.57 0.80%
International Business Machines Corporation (CDI) (IBM) $139.43 0.42%
Cisco Systems Inc. (CSCO) $45.23 0.40%
Verizon Communications Inc. (VZ) $51.40 0.21%
Microsoft Corp. (MSFT) $272.42 0.20%
Dow Chemical Co. (DOW) $68.11 0.19%
Honeywell International Inc. (HON) $230.94 0.00%
Dowdupont Inc. (DWDP) $30.52 0.00%