Stocks fell broadly Monday after new economic data prompted investors to dial back bets on interest-rate cuts this year.

Coming off its best first quarter since 2019, the S&P 500 started the trading day modestly in the green. But it reversed course after the latest Institute for Supply Management report suggested manufacturing activity expanded in March for the first time since September 2022.

The broad market index finished down 0.2% and the Dow Jones Industrial Average dropped 0.6% after both closed out last week at records. Strength in large technology stocks helped the Nasdaq Composite eke out a 0.1% gain.

Investors have been counting on the Federal Reserve to cut interest rates this year to reduce the risk of an economic slowdown. Some have worried at times that strong data could keep the central bank from reducing rates as much as they would like.

Based on a survey of purchasing managers, the ISM manufacturing index for March came in at 50.3—up from 47.8 in February and above the 48.1 reading anticipated by economists surveyed by The Wall Street Journal. A reading above 50 indicates an expansion in activity.

ISM reports aren’t government data that are incorporated into the Commerce Department’s quarterly readings on economic growth. But they are closely watched by investors, and Monday’s report pointed to improvement in what has been a weak spot in an otherwise resilient economy.

Yields on U.S. government bonds, which largely reflect investors’ expectations for short-term interest rates set by the Fed, added to overnight gains after the report. The yield on the benchmark 10-year U.S. Treasury note climbed back to the top of its 2024 range, settling at 4.329%, up from 4.192% Thursday before the long holiday weekend.

The ISM report “created a little bit of doubt in the bond market, and that is feeding through to the equity market,” said Steven Wieting, chief investment strategist and chief economist at Citi Wealth.

Interest-rate futures showed that investors still anticipate that the Fed will cut rates three times this year, starting at its June policy meeting. But the expected chances of three or more cuts declined to around 55%, according to CME Group, from 66% Thursday. At the start of this year, investors had expected six rate cuts.

Stocks have largely shrugged off this year’s rise in Treasury yields and reduced bets on interest-rate cuts. The S&P 500 climbed 10% over the first three months of the year, adding to last year’s 24% gain.

The gains have been fueled by excitement over artificial intelligence, solid corporate earnings and investor confidence that inflation is on its way back to the Fed’s 2% target, despite two months of hotter-than-expected price data. All of the S&P 500’s 11 sectors except real estate advanced in the first quarter.

That momentum didn’t carry over into Monday. Among the many stocks that fell, Walgreens Boots Alliance dropped 9.9% after the pharmacy giant booked a steep quarterly loss last week.

Shares in Trump Media & Technology Group slid 21%. Former President Donald Trump’s social-media company reported full-year earnings results for last year showing that it had a nearly $60 million operating loss. Traders are watching to see if its board will grant the former president a waiver to sell or borrow against the stock.