Market sentiment took a downturn on Tuesday as investors digested a fresh batch of economic indicators, while geopolitical tensions surrounding Iran’s potential missile strike against Israel sent bond yields tumbling and crude oil prices soaring. The Dow Jones Industrial Average plummeted 0.5%, while the S&P 500 fell 1% after both indices reached new record highs last quarter. The tech-heavy Nasdaq Composite led the decline, dropping 1.7% in early trading.
The latest jobs and manufacturing data kicked off the new quarter, providing investors with crucial insights into the Federal Reserve’s easing cycle. Despite Fed Chair Jerome Powell’s hints that the central bank is in no rush to cut rates rapidly, job openings surprisingly rose in August, suggesting the labor market is cooling but not rapidly slowing. The Bureau of Labor Statistics reported 8.04 million job openings at the end of August, up from 7.71 million in July.
Meanwhile, US manufacturing held steady in September, with the Institute for Supply Management’s manufacturing PMI remaining unchanged at 47.2. Although the reading indicates a contraction in the manufacturing sector, it provides some relief to investors who were bracing for a sharper decline.
The week ahead is packed with closely watched economic data, culminating in Friday’s September jobs report. Investors are eagerly awaiting confirmation that the US economy is indeed cooling, rather than crumbling. A strike by dockworkers on the East and Gulf coasts has also added to market uncertainty, threatening to disrupt the flow of half the US’s ocean shipping and potentially costing the economy billions of dollars daily.
In corporate news, Stellantis, the maker of Jeep and Dodge cars, issued a recall for over 150,000 hybrid Jeep SUVs due to a potential fire risk. The automaker’s shares fell 1% in premarket trading, following a 12.5% plunge on Monday after it issued a gloomy outlook for its North American operations.
Barclays analyst Tim Long also sounded the alarm on Apple, citing weak demand for the iPhone 16. Long believes Apple may have cut production by roughly 3 million units for the December quarter, which would be the earliest build cut in recent history. The analyst reiterated an Underweight rating on Apple, equivalent to a Sell rating.
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