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The broad S&P 500 pulled back from the record closing high it logged last week after a round of disappointing global manufacturing data weighed on traders' sentiment.
As of 3:15 p.m. ET, the Dow Jones Industrial Average fell 32 points, or 0.22%, to 14547, the S&P 500 dipped 9.3 points, or 0.59%, to 1560 and the Nasdaq Composite slipped 32.3 points, or 1%, to 3235.
Wall Street posted an impressive first quarter, with the Dow and S&P both rallying more than 10%. The Dow ended the quarter at a record high, while the S&P notched a record close. The second quarter was off to a more subdued start Monday, with traders filing back to work after a long weekend.
Losses on the day were highly concentrated in three economically-sensitive sectors: Industrial, materials and technology. Meanwhile, sectors that are generally seen as less vulnerable to economic weakness, like telecommunications and utilities, fared dramatically better.
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The action came on the back of a round of disappointing data on the global manufacturing sector.
Global PMI Reports Disappoint
The Institute for Supply Management's Purchasing Manager's Index slid to 51.3 in March from 54.2 in February. Economists expected the closely-watched gauge of U.S. manufacturing activity to hold steady for the month. The reading suggests the factory sector is still expanding, but at a dramatically slower pace than the month prior.
A separate report from the Commerce Department showed construction spending rising 1.2% in February from January, slightly better than expectations of 1%.
On the Asian front, China's official PMI climbed by 0.8 point in March from February to 50.9, missing expectations of 52. The reading suggest China's manufacturing sector expanded at the swiftest pace in 11 months. A separate PMI gauge from HSBC rose 1.2 points to 51.6 in March.
"China's recovery continues, mainly driven by the gradually improving domestic demand conditions," Hongbin Qu, the bank's chief economist for China wrote in the report.
Still, Zhiwei Zhang, an economist at Nomura, wrote to clients Monday the the recovery in China is "unsustainable." Zhang sees growth in the world's No. 2 economy slowing down in the second half of the year.
Last Friday, while U.S. markets were closed, there were two generally upbeat reports out on the American consumer sector.
The Reuters/University of Michigan gauge of consumer sentiment soared to 78.6 in late March from an earlier reading of 71.8 -- the biggest upward revision on record. Economists expected a reading of 72.5.
U.S. consumer spending rose 0.7% in February from January, the biggest gain since September 2012, and slightly better than estimates of a 0.6% increase. Meanwhile, personal income jumped 1.1%, also topping forecasts of a 0.8% rise.
In corporate news, a judge dismissed a large part of a lawsuit brought against large banks, including J.P. Morgan Chase (JPM) and Bank of America (BAC) over manipulation of the London Interbank Offered Rate (LIBOR) -- a key benchmark rate. Specifically, the judge dismissed anti-trust and RICO claims, and partially dismissed commodities manipulation claims.
Elsewhere, energy futures were mildly lower on the disappointing China data. The benchmark U.S. crude oil contract fell 66 cents, or 0.68%, to $96.57 a barrel. Wholesale New York Harbor gasoline dipped 0.14% to $3.106 a gallon. In metals, gold rose $3.40, or 0.22%, to $1,599 a troy ounce.
The Euro Stoxx 50 rose 0.44% to 2624, the English FTSE 100 climbed 0.38% to 6412 and the German DAX edged up 0.08% to 7795.
In Asia, the Japanese Nikkei 225 plunged 2.1% to 12135 and the Chinese Hang Seng dropped 0.74% to 22300.