Financial concerns are causing a decline in U.S. stock markets.
Following the holiday break, American stock markets started on a downward spiral. Recent economic data is giving investors second thoughts about a smooth recovery for the U.S. sector. The Nasdaq is especially bearing the brunt of this shift.
U.S. industry data has had a significant impact on Wall Street. The Dow Jones Industrial Average closed Tuesday 1.5% lower at 40,936 points. The tech-focused Nasdaq plummeted 3.3% to 17,136 points, and the extensive S&P 500 dropped 2.1% to 5,528 points.
The atmosphere was somber due to the U.S. manufacturing purchasing managers' index, which inched up by 0.4 points from July. Although it reached 47.2 points, the index remained way below the 50-point growth benchmark. Economists anticipated an increase to 47.5 points. "If we're banking on a gentle landing for the U.S. economy, these figures aren't what we had in mind," said Josh Jamner, strategist at ClearBridge Investments.
Investors are now waiting for U.S. job figures later in the week. These figures might indicate whether the U.S. Federal Reserve will implement the anticipated interest rate hike with a 0.25% or 0.5% decrease. "Markets are pricing in a 0.25% decrease, with a 20% chance of 0.5%," said Konstantin Oldenburger, analyst at broker CMC Markets. "The U.S. job statistics on Friday could sway this see-saw one way or the other." Investors are also monitoring U.S. data on job vacancies on Wednesday and jobless claims on Thursday. The Federal Reserve, led by Chairman Jerome Powell, is attempting to curb inflation and cool down the overheated labor market by raising interest rates.
Oil prices crash
A media report hinting at a potential resolution of oil production issues in Libya sent oil prices to their lowest level since December. The North Sea Brent crude and U.S. WTI crude both dipped by around five percent, landing at $73.66 and $70.31 per barrel (159 liters). Giovanni Staunovo, analyst at Swiss bank UBS, attributed the drop to a Bloomberg report suggesting that a political dispute that had halted oil production and exports in Libya was nearing resolution.
U.S. Steel was under the spotlight among companies, losing over six percent. Presidential candidate Kamala Harris raised concerns about the takeover of the steel company by Japanese firm Nippon Steel.
Boeing shares also plummeted, falling roughly seven percent. Financial services firm Wells Fargo downgraded the troubled aircraft manufacturer's stock to "underweight" from "equal weight." High aircraft development costs and other factors pose a threat to the company's cash flow targets.
A negative comment from U.S. investment bank Morgan Stanley caused Alphabet stock to decrease by 3.7% to $157.36. Analysts lowered their price target to $190 from $205 formerly. The long-term ramifications of a U.S. judge's ruling in early August are behind the move.
Going against the general market trend, Southwest Airlines rose 2.3% to $29.58. Investment bank Evercore upgraded the airline's stock to "outperform" from "in-line" and increased its price target to $35 from $30.
For further information on today's market developments, you can read here.
The ongoing economic challenges are causing concern for the U.S. economy. Recent declines in the Dow Jones Industrial Average, Nasdaq, and S&P 500 reflect investor uncertainty about the economic recovery.
Despite the slight increase in the U.S. manufacturing purchasing managers' index, it remains below the growth benchmark, raising doubts about a smooth economic recovery.
