Stocks pared losses on Monday, the first trading day of the new quarter, as financials came off of lows in the final hour.
The S&P 500 was down 0.14%, the Dow Jones Industrial Average dropped 0.02%, and the Nasdaq fell 0.2%. The tech-heavy Nasdaq had traded at all-time intraday highs earlier Monday after closing at records several days last week.
Financial stocks remained among the worst performers on Monday, continuing the correction following their massive rally since November. The sector received a big boost after Donald Trump was elected president in November. Trump had promised to introduce business-friendly reforms, including relaxing Dodd-Frank regulations, introducing changes to the tax code, and backing infrastructure spending. Faith in Trump's ability to execute these promises was somewhat tarnished after his Obamacare repeal and replace bill failed to secure enough support.
Industry leaders including Wells Fargo (WFC - Get Report) , Bank of America (BAC - Get Report) , Citigroup (C - Get Report) , HSBC (HSBC) , JPMorgan (JPM - Get Report) and Goldman Sachs (GS - Get Report) were all lower on Monday, while the Financial Select Sector SPDR ETF (XLF - Get Report) fell 0.6%.
It was a mixed March for automakers. Ford (F - Get Report) reported weaker sales in March vs. last year with overall sales dropping 7.2% to 236,250 vehicles. Analysts anticipated a decline of 5.6%. Sales of its popular F-series increased by 10% to 81,330 units. Ford fell 2.5%.
Toyota (TM - Get Report) sales declined by 2.1%, less than an anticipated drop of 2.7%. In the year to date, Toyota sales in the U.S. have fallen 6.4%. Fiat Chrysler (FCAU - Get Report) reported a 5% drop in unit sales over March, more than double the expected decline. Car sales slid 14%, while truck sales increased 6%.
Manufacturing activity in the U.S. slowed in March, though at a slightly slower pace than anticipated. The ISM Manufacturing Index retreated to 57.2 in March from 57.7 in February, though exceeded economists' targets of 57.1. The measure remained above 50, the line separating expansion from contraction. The ISM employment index reached a six-year high in March.
A separate reading on manufacturing activity showed a decrease in March, though the measure remained in expansion territory. The U.S. Markit manufacturing PMI declined to 53.3 in March from 54.2. Growth was at its lowest in six months.
U.S. construction spending increased in February, reversing a drop in January. Spending rose by 0.8% following a 0.4% decline in January. Economists anticipated a slightly stronger reading of 1% growth.
Wall Street entered the second quarter on Monday with stocks at or close to all-time records. Equities have shown remarkable resilience since the U.S. presidential election last November as investors placed bets the Trump administration would introduce business-friendly tax reform and infrastructure spending.
The Dow ended last week a little more than 450 points from its all-time closing high of 21,115.55 set on March 1. The S&P 500 was just 28 points, or a 1.4% increase, from its record close of 2,395.96 set on the same day. The Nasdaq closed Friday just under its record of 5,914, set on March 30.
For the first quarter, the Nasdaq logged the best gains of the three major benchmark indexes with an increase of 10% over the first three months of the year. The S&P 500 closed up nearly 6% for the first quarter, while the Dow rose almost 5%. The Dow's gain is its sixth quarterly increase in a row, the longest stretch since the end of 2006.
"The second quarter isn't likely to repeat the first, but strong economic fundamentals, along with rising corporate earnings, could continue to push markets higher," said Brad McMillan, chief investment officer for Commonwealth Financial Network. "Rising confidence will support valuation levels and also offers a real possibility of upside surprises in the hard economic data, which could translate into even better-than-expected earnings growth."
Crude oil ended the first quarter with losses of 5.8%, even as the commodity settled Friday at its best level in more than three weeks. Oil had a positive week as a reading on domestic inventories showed a smaller-than-expected rise and production disruptions in Libya increased hopes of a hit to global output.
West Texas Intermediate crude oil closed 36 cents lower at $50.24 a barrel on Monday.
Investors were also looking ahead to the rest of the week with several key economic data on tap, including the March jobs numbers on Friday. It will likely be another month of strength in the U.S. labor market with 174,000 jobs expected to have been added to the economy. The unemployment rate is estimated to have held at 4.7%, while wages are anticipated to have climbed 0.3%.
Other readings on the labor market include the ADP National Employment Report for March -- the unofficial reading on private payrolls ahead of the official U.S. jobs report -- on Wednesday and weekly jobless claims at their regular time on Thursday.
Investors will also get the rundown of what went on behind closed doors during the Federal Reserve's March meeting when minutes are released on Wednesday afternoon. At that meeting, the central bank decided to raise the federal funds rate by 25 basis points, the third interest rates increase since 2008. The decision was near unanimous with only one dissenter. The Fed also forecast two more rate hikes in 2017, in line with its previous forecasts and as markets have anticipated.
"We will look for any insight concerning risks to the outlook for interest rates," RBS analysts wrote in a note. "While the FOMC's "base case" seems clear, we wonder to what extent participants see growing upside risks to the economic outlook and /or the possibility that four (rather than three) rate hikes might be necessary this year."
Under Armour (UA - Get Report) fell 0.8% after FBR Capital downgraded its rating to underperform from market perform. Analyst Susan Anderson said recent channel checks had disappointed and that competition is heating up.
Tesla (TSLA - Get Report) delivered a record 25,000 vehicles in the first quarter, an increase of 69% from a year earlier. The maker of electric cars said Sunday it delivered about 13,450 Model S cars and about 11,550 Model X SUVs. Tesla said another 4,650 vehicles were being transported to customers at the end of the quarter and will be included in second-quarter deliveries. Production in the first quarter totaled a record 25,418 vehicles, Tesla said. Tesla shares rose 4.8%, putting its market cap at $47.7 billion and surpassing Ford as the second-largest car company in the U.S.
FactSet (FDS - Get Report) was slightly higher after raising its profit and sales estimates for its third quarter. The financials database company anticipates quarterly sales between $311 million and $317 million, up from its previous range of $301 million to $307 million. Adjusted earnings are expected to come in between $1.81 to $1.87 a share. The previous range was $1.80 to $1.86.
Casino owners Wynn Resorts (WYNN - Get Report) and Las Vegas Sands (LVS - Get Report) moved higher after March figures for gambling revenue in Macau showed a larger increase than anticipated. Revenue in the gambling destination rose by 18% in March, above an estimated range of 12% to 16%. Gambling revenue has risen for eight straight months.
Caterpillar (CAT - Get Report) will close its Aurora, Ill. plant, laying off around 800 jobs and moving production to its plants in Decatur, Ill. and North Little Rock, Ark. The heavy machinery company plans to shift the production by the end of next year. Around 1,200 non-production jobs will remain in Aurora.
Panera Bread (PNRA) surged more than 6% on Bloomberg reports the company is courting suitors for a potential sale. The reports haven't been confirmed.