FYI: U.S. stocks swung sharply in another volatile session Thursday as investors bet a string of disappointing economic data would spur the Federal Reserve to continue cutting interest rates.
The Dow Jones Industrial Average dropped as much as 335 points—and then recovered all of those losses to turn higher—after data showed services activity softened in September.
The Institute for Supply Management said its nonmanufacturing index hit a three-year low, sparking fears a manufacturing slowdown had spread to other parts of the economy.
The blue-chip index had already tumbled about 840 points, or 3.1%, over the two previous trading sessions on worries about an economic downturn. Reports earlier in the week showed U.S. factory activity slid to a 10-year low in September and the pace of job creation in the private sector slowed.
Thursday’s services data added to the anxiety, prompting traders to increase their bets on further easing by the Fed.
Federal-funds futures show traders are betting there’s a 53% chance of the central bank lowering its benchmark short-term interest rate two more times by the end of the year, according to the CME Group. That’s up from 39% Wednesday and 19% a week ago.
The Dow industrials climbed 123 points, or 0.47%, swinging nearly 450 points from the high to the low on the day. The S&P 500 rose 0.80%, and the Nasdaq Composite grew 1.12%.
The services sector had previously been considered a bright spot in the economy, overshadowing signs of weakness in the manufacturing space. But cracks started to emerge last week after data showed consumer spending cooled in August.
Investors continued to seek the safety of government bonds and gold. The yield on the benchmark 10-year U.S. Treasury note dropped for the sixth straight session, to 1.534% from 1.594% Wednesday, as bond prices rose. Gold climbed 0.5%, up for a third consecutive session.
Within the S&P 500, technology and energy stocks were among the biggest gainers. The real-estate and consumer-staples sectors—generally considered havens for their steady dividend payments—were also higher. Financial stocks were the only group in the red, slipping 0.2%.
In corporate news, PepsiCo shares climbed 3.8% on a better-than-expected earnings report. The food-and-beverage company posted strong revenue growth, though foreign-exchange moves weighed on the business.
Shares of Constellation Brands dropped 5.4% after the Corona brewer swung to a loss in the latest quarter.
Meanwhile, disappointing manufacturing data out of the U.K. added to growth fears.
The Stoxx Europe 600 fell less than 0.1% as fresh data added to the gloomy outlook for the broader European economy.
The U.K. services purchasing managers index hit a six-month low of 49.5, below the 50 level that marks contraction. The figures reignited concerns that the economy is in recession, analysts at Capital Economics said, adding that economic performance will remain “well below par” while Brexit negotiations drag on.
In Asia, Japan’s Nikkei fell 2%, while Hong Kong’s Hang Seng rose 0.3%. Stock markets in China and South Korea were closed.
In commodity markets, oil prices slipped 0.2%, with the U.S. benchmark on track for its eighth straight day of declines.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-10-03/your-evening-briefingAP:
https://apnews.com/47bc840fb74d4140bc9ba893c3ebe521MarketWatch:
https://www.marketwatch.com/story/us-stock-futures-lean-higher-after-two-days-of-heavy-selling-2019-10-03/printWSJ:
https://www.wsj.com/articles/global-stocks-slip-on-weak-data-tariff-threat-11570090333Bloomberg:
https://www.bloomberg.com/news/articles/2019-10-02/asian-stocks-set-to-slide-as-slowdown-fears-grow-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/stock-market-reverses-higher-amid-positive-signals/CNBC:
https://www.cnbc.com/2019/10/03/us-futures-point-to-slightly-lower-open.htmlReuters:
https://uk.reuters.com/article/us-usa-stocks/wall-street-gains-as-services-data-raises-odds-on-fed-rate-cuts-idUKKBN1WI199U.K:
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-hits-eight-month-low-as-global-slowdown-fears-take-hold-idUKKBN1WI0J4Europe:
https://www.reuters.com/article/us-europe-stocks/euro-zone-shares-edge-higher-on-rally-in-airbus-luxury-stocks-idUSKBN1WI0KKAsia:
https://www.cnbc.com/2019/10/03/asia-markets-eu-tariffs-us-eu-trade-currencies-and-oil.htmlBonds:
https://www.cnbc.com/2019/10/03/us-treasury-yields-lower-amid-trade-turmoil.htmlCurrencies:
https://www.cnbc.com/2019/10/03/forex-markets-us-jobs-data-in-focus.htmlOil
https://www.cnbc.com/2019/10/03/oil-markets-global-economy-in-focus.htmlGold:
https://www.cnbc.com/2019/10/03/gold-markets-us-jobs-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 
Comments
Makes perfect sense!
http://www.washingtonpost.com/business/economy/banks-are-paying-people-to-borrow-money-thats-alarming-news-for-the-global-economy/2019/08/13/8eb7b9ca-bada-11e9-a091-6a96e67d9cce_story.html