FYI: The Dow Jones Industrial Average dropped almost 500 points Wednesday as worries about a slowdown in the U.S. economy rattled markets to start the fourth quarter.
Concerns about slowing global growth have resumed this week, shaking a bet among U.S. investors that the trade war-induced slowdown overseas wouldn’t hit the domestic economy with the same force. That bet was upended after data Tuesday showed a gauge of U.S. factory activity contracted for the second consecutive month, falling to its lowest level since June 2009.
Wednesday’s private-sector jobs report, which showed the pace of job creation has slowed, added to the concerns about the health of the economy.
The stock market’s declines were broad and accelerated through the morning. All 11 sectors in the S&P 500 fell, as did all but one of the 30 blue-chip stocks in the Dow. Among the biggest losers were shares of big industrial and technology companies.
Delta Air Lines declined 6.8%, while aluminum parts manufacturer Arconic fell 4.6%. Apple and Google lost 2.4% and 2.3%, respectively.
“It feels like one thing after another the last couple of days,” said David Laffertry, chief market strategist at Natixis. While Wednesday’s jobs report from ADP was soft rather than outright weak, he said, “within the context of other bad macro data the last couple of days, it’s sort of piling on.”
The Dow industrials fell 494 points, or 1.86%, following a 1.3% decline Tuesday. Those declines put the index on pace for its worst start to quarter since the depths of the financial crisis in the fourth quarter of 2008, when it fell 19%.
The S&P 500 fell 1.79%, putting it in danger of falling more than 1% in consecutive sessions for the first time this year. The last time the broad equity gauge dropped that much on back-to-back days was Dec. 24, 2018, when an end-of-year selloff nearly ended the long-running bull market. The Nasdaq Composite lost 1.56%.
The selloff heightens the anxiety for two other consumer-focused reports this week—the Institute for Supply Management’s services sector report Thursday and Friday’s payrolls report.
Wednesday’s ADP National Employment Report beat muted expectations—the private sector added 135,000 jobs in September, versus estimates for 125,000 jobs. But the firm cut its August estimate by nearly 40,000, and the three-month average of 145,000 is down from 214,000 a year ago.
Altogether, it was the latest sign that businesses are turning more cautious in the face of a weakening global economy.
If the manufacturing slowdown spreads to the services sector, this would increase pressure on the Federal Reserve to cut rates again in October, said Stefan Schilbe, HSBC Germany’s chief economist.
The market odds of another Fed rate cut this year rose to 86% Wednesday morning, up from 73% a week ago, according to data from CME data show.
Markets overseas continued to react to disappointing economic data. The Stoxx Europe 600 fell 2.7%, with Germany’s DAX down 2.8%.
In Asia, South Korea’s Kospi was down nearly 2% following news that North Korea fired at least one missile off its east coast. The move, seen as a show of strength, came after Pyongyang said it would resume official nuclear talks with the U.S.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-10-02/your-evening-briefingAP:
https://apnews.com/a7bdc0d7aa6b4263ac9885dda5464fa9MarketWatch:
https://www.marketwatch.com/story/dow-futures-skid-170-points-lower-as-wall-street-awaits-adp-jobs-report-2019-10-02/printWSJ:
https://www.wsj.com/articles/global-stocks-fall-amid-rising-fears-of-economic-slowdown-11570004904Bloomberg:
https://www.bloomberg.com/news/articles/2019-10-01/stocks-in-asia-to-slide-as-u-s-data-disappoints-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-lows-599-point-plunge-dow-stock-jnj/CNBC:
https://www.cnbc.com/2019/10/02/dow-futures-trump-trade-manufacturing-data-wall-street.htmlReuters:
https://www.reuters.com/article/us-usa-stocks/wall-street-eyes-steepest-slide-in-nearly-six-weeks-on-growth-worries-idUSKBN1WH1A0U.K:
https://uk.reuters.com/article/uk-britain-stocks/uk-shares-in-tailspin-as-global-woes-deepen-brexit-angst-lingers-idUKKBN1WH0M9Europe:
https://www.reuters.com/article/us-europe-stocks/wto-trade-threats-sink-european-stocks-idUSKBN1WH0L6Asia:
https://www.cnbc.com/2019/10/02/asia-markets-october-2-global-economy-oil-currencies.htmlBonds:
https://www.cnbc.com/2019/10/02/us-treasury-yields-rise-indicating-tentative-rebound-in-sentiment.htmlCurrencies:
https://www.cnbc.com/2019/10/02/forex-markets-us-manufacturing-in-focus.htmlOil
https://www.cnbc.com/2019/10/01/oil-markets-us-oil-output-opec-in-focus.htmlGold:
https://www.cnbc.com/2019/10/02/gold-markets-us-manufacturing-data-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
https://finviz.com/fut 
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