U.S. Stocks Drop on Worries About Growth
October 02 2019 - 10:24AM
Dow Jones News
By Max Bernhard and Paul Vigna
U.S. stocks fell Wednesday, following the path of shares
overseas, as the latest payroll figures further stoked concerns
about the economy.
The Dow Jones Industrial Average fell 313 points, or 1.2%, while
the S&P 500 dropped 1.2% and the Nasdaq Composite lost
1.3%.
The ADP National Employment Report on Wednesday beat muted
expectations -- the private sector added 135,000 jobs in September,
above expectations. 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 is the latest sign that businesses are turning
more cautious in the face of a weakening global economy.
Markets overseas continued to react to disappointing economic
data. The Stoxx Europe 600 was down 1.9%, with Germany's DAX 1.7%
lower and the U.K.'s FTSE 100 down 2.5%.
Germany's leading economics research institutes jointly lowered
their growth forecasts Wednesday for Europe's largest economy. They
cited slowing global demand for capital goods, structural changes
in the auto sector -- one of Germany's most important industries --
and political uncertainty.
"There hasn't been a single month this year where Germany has
seen expansion in its manufacturing sector," said Michael Hewson,
chief market analyst at CMC Markets, who expects the weakness in
manufacturing to spill over into the services sector.
That focus was picked up in the U.S. The materials and
industrials sectors in the S&P 500 both slumped about 1%. Dow
dropped 3.4%, LyondellBassell Industries fell 3.5% and Flowserve
lost 2.5%.
If the manufacturing slowdown spreads to the still robust
service sector, this would increase pressure on the Federal Reserve
to cut rates again in October, said Stefan Schilbe, HSBC Germany's
chief economist. The ISM services sector report is due
Thursday.
The market odds of a Fed rate cut in October rose to 72%
Wednesday morning, up from 53% a week ago, according to data from
CME's FedWatch tracker.
U.K. stocks were among the hardest hit in Europe. That was
despite a weaker pound, which usually benefits FTSE 100 listed
companies, many of which derive a majority of their earnings
abroad. The pound fell 0.3% to $1.227.
Prime Minister Boris Johnson presented his latest Brexit
proposal and warned he is still prepared to take the U.K. out of
the EU at the end of October without a deal.
In Asia, 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.
In Japan, the Nikkei fell 0.5% and Hong Kong's Hang Seng was
down 0.2%. Mainland Chinese stock markets were closed for a
holiday.
In commodities, Brent crude slipped 0.4% to $58.63 a barrel.
The yield on U.S. 10-year Treasurys was slightly lower at
1.618%, from 1.638% Tuesday. Bond yields and prices move in
opposite directions.
Write to Max Bernhard at Max.Bernhard@dowjones.com and Paul
Vigna at paul.vigna@wsj.com
(END) Dow Jones Newswires
October 02, 2019 10:09 ET (14:09 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Aug 2024 to Sep 2024
FTSE 100
Index Chart
From Sep 2023 to Sep 2024