S&P 500 and Nasdaq Composite Drop 1% After Manufacturing Slump Extends to August

Barry Adams
03 Sep, 2024
New York City

On Wall Street, market indexes faced heavy selling pressure on the first trading day of September after volatile August. 

The S&P 500 index and the Nasdaq Composite dropped more than 1% after artificial intelligence-linked stocks declined as investors walked from high-flying tech stocks. 

Nvidia, Advanced Micro Devices, Qualcomm, and KLA fell 4%. 

Market sentiment recovered from a sharp decline in early August after positive updates on the labor market, inflation, and GDP growth bolstered market sentiment. 

Over the last three weeks, the improving sentiment on Wall Street powered global market advance, lifting market indexes in Europe, China, and Japan. 

Investor confidence improved further after Fed Chair Jerome Powell signaled the possibility of monetary policy adjustment, supporting the case for a lower interest rate, but fell short of announcing the amount and timing of the possible rate cut. 

Historically, September is a tough month for investors, and market indexes generally struggle. 

Investors sold stocks on Tuesday after ISM's manufacturing survey showed ongoing weakness in the sector. 

ISM Manufacturing PMI improved to 47.2 in August from 46.8 in July; the reading showed a fifth consecutive month of falling activities. 

Any reading below 50 indicates contraction, and above 50 shows an increase in the level of activities. 

In holiday-shortened trading week, investors are looking forward to the release of several key economic reports. 

On Wednesday, July's durable goods orders are expected to show an increase from the previous month. 

On Thursday, ADP payrolls in August are likely to show a decline from the 122,000 increase in July. 

Friday's nonfarm payrolls for August are expected to show an increase in private payrolls from the 114,000 in July. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 1.4% to 5,565.15, the Nasdaq Composite fell 1.7% to 17,306.18, and the Russell 2000 index fell 1.8% to 2,177.34. 

The yield on 2-year Treasury notes edged lower to 3.89%, 10-year Treasury notes increased to 3.85%, and 30-year Treasury bonds inched lower to 4.14%.

WTI crude oil decreased $3.05 to $70.99 a barrel, and natural gas prices edged down 9 cents to $2.09 a thermal unit.

Gold rose by $2.20 to $2,480.87 an ounce, and silver increased by $0.42 to $28.10.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 101.60.

 

U.S. Stock Movers

Bank of America decreased 0.9% to $40.39, and Warren Buffett-controlled Berkshire Hathaway sold 21.1 million shares over three days to Friday last week for an average price of $40.24. 

Berkshire is the largest shareholder of Bank of America and still holds an 11.4% stake of 882.7 million shares, according to the latest regulatory filing on Friday. 

United States Steel Corporation decreased 3.8% to $36.63 after Vice President Kamala Harris opposed the sale of the company to Japan's Nippon Steel. 

Pfizer declined 1.4% to $28.60, and the pharmaceutical company and Valneva reported positive results in the mid-stage trial for a vaccine to treat Lyme disease. 

Oil explorers declined on Wall Street following the sharp fall in crude oil prices for immediate month deliver on demand growth worries in the U.S. and China. 

Exxon Mobil decreased 3.2% to $114.17, Chevron fell 2.2% to $144.76, Occidental Petroleum dropped 2.2% to $55.61, and ConocoPhillips eased 3.7% to $109.59.