The Dow dropped six-tenths of a percent, the S&P 500 slid two-tenths and the Nasdaq ticked up one-tenth of a percent.
Data from the Institute for Supply Management showed U.S. manufacturing grew for the first time in a year-and-a-half in March.
While that suggests a strong economy, it also suggests the Federal Reserve could delay its first interest-rate cut, explains Ross Mayfield, Investment Strategy Analyst at Baird.
"You see that pop in Treasury yields because it's going to encourage the Fed that they don't necessarily need to cut, that the economy is strong in spite of their rate hikes and where rates are. So, to the extent that it's pulling rate cuts off the table for 2024, you're seeing a bit of weakness in equities. But again, not all that concerning because the backdrop is, it means a stronger economy."
The U.S. rate futures market was pricing in a 58% chance of a rate cut in June, down from about 64% a week ago, according to the CME's FedWatch tool.
As for the day's movers, shares of FedEx fell more than 3% after rival UPS said it will become the primary air cargo provider for the United States Postal Service, as FedEx announced an end to its more than 20-year partnership with the postal service.
Shares of Micron Technology gained nearly 5.5% after Bank of America lifted its price target on the stock.
And shares of Donald Trump's Trump Media plunged 21.5%, wiping out the gains from its debut last week, after disclosing millions in losses and saying it would struggle to meet its financial liabilities going forward.
