US close: Stocks turn weaker after mixed manufacturing data

dl exchange place wall st street pl new york city nyc ny nyse stock exchange dow jones sp nasdaq finance dollar dollars us usa united states of america — Exchange PlaceSharecast photo / Josh White

Wall Street stocks closed weaker on the first day of August, with manufacturing data and comments from the Fed's Neel Kashkari were in focus.

At the close, the Dow Jones Industrial Average was down 0.14% at 32,798.40, as the S&P 500 lost 0.28% to 4,118.63 and the Nasdaq Composite was off 0.18% to 12,368.98.

The Dow closed 46.73 points lower on Monday, taking a small bite out of the gains it recorded on Friday at the end of Wall Street's best week since 2020.

“Nancy Pelosi’s plan to visit Taipei has caused some consternation amongst markets as the House Speaker raises the risk of a confrontation between the US and China,” said IG senior market analyst Joshua Mahony.

“While talks between Biden and Xi raised hope that the two countries could find common ground to help steady the boat at a time of economic difficulty, we are instead faced with a potential military standoff as the US seeks to establish their position to avoid a repeat of the Russia-Ukraine conflict.

“For markets, this fear is reflected in a strengthening dollar-offshore renminbi, which hit a two-month high despite the wider dollar selloff.”

On the economic front, S&P Global's manufacturing reading was revised slightly lower to 52.2 in July, down from a preliminary reading of 52.3, pointing to the lowest factory growth since July 2020.

Output dropped for the first time since June 2020 amid weaker demand conditions, difficulties finding candidates to fill vacancies and raw material shortages

Elsewhere, the Institute for Supply Management's manufacturing PMI dipped to 52.8 in July, down from 53 in June and beating market forecasts for a print of 52.

Finally on US data, construction spending fell by 1.1% month-on-month to a seasonally adjusted annual rate of $1.76trn in June, according to the Census Bureau, up from a revised 0.1% increase in May.

Private construction spending contracted 1.3%, while public construction spending shrank 0.5%.

Market participants were also digesting comments from the Federal Reserve's Neel Kashkari over the weekend, with the central banker stating the Fed - which hiked rates by 75 basis points last week - was committed to bringing inflation down to 2%.

That would require US interest rates to reach double-digit territory, Kashkari said, adding that the process of front loading had not come to an end just yet.

Further afield, data out of China was attracting investor attention at the open, with the nation's recent rebound beginning to stall.

The Caixin/Markit manufacturing PMI dropped into contraction territory to print at 49 - down from its previous reading of 50.2.

In equities, American chipmakers were in the green on the back of the better-than-expected manufacturing PMI, with Advanced Micro Devices up 2.45% and Nvidia ahead 1.53%.

Weaker oil prices pushed energy plays to the downside, meanwhile, with Chevron down 2%, Diamondback Energy off 1.64%, and ExxonMobil losing 2.53%.

Reporting by Josh White at Sharecast.com. Additional reporting by Iain Gilbert.

Dow Jones - Risers

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Intel Corp. (INTC) $36.96 1.79%
Home Depot Inc. (HD) $305.82 1.62%
International Business Machines Corporation (CDI) (IBM) $132.04 0.96%
Walgreens Boots Alliance, Inc. (WBA) $39.89 0.68%
Coca-Cola Co. (KO) $64.52 0.55%
Walmart Inc. (WMT) $132.54 0.37%
McDonald's Corp. (MCD) $264.23 0.33%
Verizon Communications Inc. (VZ) $46.26 0.15%