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Hawkish Fed officials and higher manufacturing prices gave markets a bad start to March.

What you need to know today

• The 10-year Treasury yield broke the 4% level on Wednesday, though it settled back at 3.994%. U.S. stocks closed mostly lower, with the Dow Jones Industrial Average finishing unchanged. European markets lost ground too. Germany's Stoxx 600 lost 0.7% as a flash estimate put Germany's inflation rate, measured with the EU's methodology, at 9.3%.

• Tesla CEO Elon Musk unveiled his "Master Plan 3" on the company's Investor Day. Musk talked up a sustainable energy economy, but didn't give specifics on achieving that goal. Details on the company's "next gen" vehicle were lacking, too. Shares dropped 1.43% in regular trading and 3.04% after hours.

• The U.S. Senate passed a bill overturning a Labor Department rule allowing retirement fund managers to consider environmental, social, and corporate governance factors when making investment decisions. President Joe Biden said he would veto the bill if it comes to his desk.

• Salesforce shares jumped 15.54% in after-hours trading after the company's fiscal fourth-quarter earnings and operating margin beat estimates. The cloud software maker has recently been under pressure by activist investors.

• PRO Greenlight Capital, a hedge fund, enjoyed a return of 42.3% even when markets were struggling last year. Founder David Einhorn said he's continuing to bet against "bubble baskets" of stocks this year.

The bottom line

Hawkish sentiment from Federal Reserve officials weighed on stocks and buoyed Treasury yields, giving markets a disappointing start to March.

Minneapolis Federal Reserve President Neel Kashkari said Wednesday he's "open-minded" about raising interest rates by either 25 or 50 basis points. Kashkari, who is a voting member on the Federal Open Market Committee, added he might hike rates even further. "I would continue to push up my policy path," he said. Atlanta Fed President Raphael Bostic said he's comfortable with the 5% to 5.25% target proposed by the FOMC last year – but he warned rates would need to remain high "until well into 2024."

The S&P 500 lost 0.47% and the Nasdaq Composite dropped 0.66%. The Dow, however, managed to hold steady. "We are currently in the … period between central banks winding down interest rate increase cycles and seeing what impact those increases will have on the real economy," said William Northey, senior investment director at U.S. Bank Wealth Management.

February's ISM Manufacturing Index gave a clue of what that impact looks like. The reading came in at 47.7%, meaning that the overall manufacturing sector contracted in February — for the fourth consecutive month. Employment in the sector also dipped. That's good news for Fed officials worried about an overheating economy and labor market. But the devil's in the details: The report showed that prices paid by manufacturers increased from January. Inflation isn't done with the industry just yet.

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