Equities Tumble on Rate-Cut-Delay Worry After Data

• Stocks continued falling from Monday’s losing session, after hot manufacturing data dented hopes of a June rate cut.
• Futures markets now hold odds of a June cut at less than 60%.
• Bond yields rose on diminished Fed easing bets, with the 10-year rate at its highest in months.

US stocks declined for a second day after Monday’s surprisingly hot economic data undercut hopes for an interest rate pivot by June.

Futures markets are now pricing in a less than 60% chance that the Federal Reserve lowers rate that month, after the ISM index punched past expectations. 

Manufacturing activity surged to 50.3 in March, marking the first monthly expansion in 16 months. As production rebounds and demand remains strong, Fed officials can afford to be more patient with rate cuts.

With Fed easing bets dented, bond traders have led a Treasury selloff, and the 10-year yield rocketed to a four-month high on Monday. The rate continued climbing into the next session, rising 6 basis points Tuesday morning.

Investors will be watching Fed Chairman Jerome Powell speak on Wednesday for more clues as to interest rate policy, while Friday’s jobs report could also sway outlooks.

Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Tuesday: 

• West Texas Intermediate crude oil climbed by 1.52% to $84.86 a barrel. Brent crude, the international benchmark, jumped by 1.33% to $88.57 a barrel. 
• Gold edged up 0.28% to $2,257.22 per ounce. 
• The 10-year Treasury yield rose 6 basis points to 4.389%. 
• Bitcoin slid 6.2% to $65,421.