US markets rally despite NY manufacturing contraction
Stocks climb as investors focus on Nvidia GTC and Fed week outlook
US stocks surged on Monday, defying weaker-than-expected manufacturing data that showed New York factory activity contracted unexpectedly in March. The Dow Jones Industrial Average jumped more than 500 points, or 1.14%, while the S&P 500 gained 1.24% and the Nasdaq composite climbed 1.38%, according to market data.
The Empire State Manufacturing Index, a closely watched gauge of regional factory activity, fell to -0.2 in March, sharply down from February's reading of +7.1 and missing economist expectations of 3.2 to 4.1. A reading below zero signals contraction in manufacturing activity for the New York region.
Despite the unexpected deterioration, market participants appeared to look past the regional data, focusing instead on two major catalysts dominating investor attention this week: Nvidia's GPU Technology Conference (GTC) and the Federal Reserve's upcoming policy meeting.
Nvidia CEO Jensen Huang unveiled the company's Vera Rubin platform at the GTC conference, which runs March 16-19 in San Jose. The next-generation AI accelerator system, integrating six co-designed chips including the Rubin GPU and Vera CPU, aims to deliver between 3.3 and 5 times improvement in inference performance over its previous Blackwell Ultra platform. Huang also highlighted Nvidia's push into "agentic AI"—autonomous systems capable of complex reasoning—through its new NemoClaw platform.
"Analysts widely viewed GTC 2026 as a critical catalyst to alleviate investor concerns about growth deceleration beyond 2026," according to market analysis from AlphaSpread. Wall Street maintains a strong bullish consensus on Nvidia shares, with average price targets around $273 despite the stock trading below its October 2025 all-time high of $207.
Investors are also turning their attention to the Federal Reserve's two-day policy meeting, which begins Tuesday and concludes Wednesday with the latest interest rate decision and economic projections. The Fed is widely expected to hold rates steady at 3.50%-3.75%, according to economists surveyed by multiple outlets. More importantly, the meeting will include the release of the Fed's quarterly Summary of Economic Projections—the so-called "dot plot"—which will provide updated forecasts for interest rates, inflation, and economic growth through the remainder of 2026.
The muted market reaction to the Empire State manufacturing data may reflect its regional nature and variable predictive power for broader US manufacturing trends. While the index surveys approximately 200 manufacturing executives across New York State and serves as an early bellwether for economic activity, its correlation with national manufacturing indicators like the ISM PMI can vary, and IHS Markit PMI data has historically shown a stronger track record for predicting official manufacturing output.
Financial shares performed particularly well amid the broader rally, climbing 1.6%, while energy stocks rose 0.2%. The divergence between weakening regional manufacturing data and strong equity performance underscores the complex crosscurrents facing investors as they balance concerns about economic momentum against optimism surrounding artificial intelligence developments and expectations for a potentially more accommodative Federal Reserve stance.