By Mark DeCambre, MarketWatch , Andrea Riquier
Dow and S&P 500 both now below 100-day moving averages
U.S. stocks continued their slide Wednesday morning, and was on
pace for its worst daily drop in about six week, as data showing
slower job creation added to concerns about economic growth and the
effects of President's Trump's trade policies on manufacturing in
particular.
Carmaker stocks fell after quarterly sales reports from Ford and
General Motors added to concern over profit margins in the
industry. All 11 S&P 500 sectors fell with industries sensitive
to economic growth dropping most.
What did major indexes do?
The Dow Jones Industrial Average was off 530 points, or 2.0%, to
26,040, while the S&P 500 index fell about 52 points or 1.86%,
at 2,888. The Nasdaq fell 127 points, 1.6%, to 7,780.
The Dow and S&P 500 have now both broken below their 100-day
moving averages.
On Tuesday, the Dow lost 344 points, or 1.3%, to finish
26,573.04, the S&P 500 fell 37 points, or 1.2%, to end at
2,940.25. The Nasdaq Composite Index retreated 91 points, or 1.1%,
to close at 7,908.68. The small-capitalization Russell 2000 index
saw a steeper drop, losing 1.9% to 1,493.43. The S&P 500 closed
below its 50-day moving average for the first time since Sept.
4.
What's driving the market?
A private-sector employment report
(http://www.marketwatch.com/story/adp-says-135000-private-sector-jobs-created-in-september-as-hiring-continues-to-slow-2019-10-02)
from Automatic Data Processing showed that a modest 135,000 jobs
were created in September, another sign that hiring is slowing
along with the broader U.S. economy. That missed the Econoday
consensus forecast of 152,000 jobs. The average monthly job growth
for the past three months also fell to 145,000 from 214,000 for the
same time period last year.
"It's very simple. Everyone smells a weakening economy," said
Steve Blitz, chief U.S. economist for TS Lombard. "The ISM data
(http://www.marketwatch.com/story/slumping-us-manufacturers-experience-worse-month-since-end-of-great-recession-ism-finds-2019-10-01)
spooked them, the construction data
(http://www.marketwatch.com/story/construction-spending-up-01-in-august-after-revised-flat-reading-in-july-2019-10-01)
sucked and everyone realizes the economy is slowing down. There's
nothing that says recession yet but everyone's looking around the
corner."
Market participants are hoping the Federal Reserve will further
lower interest rates when it meets in October, but the Fed may be
reluctant to cut again with rates not far from zero, Blitz said.
"All you hear about from the Fed is how they don't have a lot of
basis points to give away so they have to be careful and do maximum
effect." But if economic data continues to disappoint, "the data
might force their hands," Blitz told MarketWatch.
The ADP payrolls report is published ahead of the more closely
followed U.S. Labor Department's nonfarm-payroll report due on
Friday.
Later Wednesday morning, the World Trade Organization ruled in
favor of the U.S. in its pursuit of additional tariffs against E.U.
goods
(https://www.cnbc.com/2019/10/02/wto-rules-in-favor-of-us-in-aircraft-subsidies-dispute.html)
over what the Trump administration says is illegal subsidies
granted to Airbus. As much as $7.5 billion of imports could be
subject to fresh tariffs.
The U.S. and China are due to resume talks next week on
resolving the trade dispute between the world's two largest
economies. "Markets will be looking for positive commentary from
both sides going into this meeting and tangible steps to an
agreement immediately after," Nicholas Colas, co-founder of
DataTrek Researchhe said in a note.
In other data, the U.S. Energy Information Administration
(http://www.marketwatch.com/story/eia-reports-a-third-straight-weekly-rise-in-us-crude-oil-supplies-2019-10-02)
said U.S. crude oil inventories were up 3.1 million barrels
compared to last week, marking the third-straight weekly increase,
another signal of a slowing economy as demand slackens.
Which stocks are in focus?
Johnson & Johnson(JNJ) shares rose nearly 3% after the
company cut a deal to avoid an upcoming opioid litigation
trial.
Shares of pharmaceutical company Savara Inc.(SVRA) tumbled 47%
in morning trading after the company said the U.S. Food and Drug
Administration had found its application for a new medication
insufficient.
Discount-broker stocks continued to fall after the Tuesday
announcement by Charles Schwab Corp.(SCHW) that it would cut most
trading commissions to zero
(http://www.marketwatch.com/story/can-it-get-any-cheaper-to-be-an-investor-2019-10-01).
TD Ameritrade Holdings Corp.(AMTD) lost 3% in early-morning
trading.
Ford (F) fell after the automaker reported third-quarter vehicle
sales fell 4.9%
(http://www.marketwatch.com/story/ford-third-quarter-vehicle-sales-fall-as-declines-in-suv-and-car-sales-offset-truck-sales-growth-2019-10-02)
from a year ago to 580,251 vehicles, as a 10.5% drop in
sport-utility vehicle (SUV) sales and a 29.5% tumble in car sales
offset an 8.8% rise in truck sales. General Motors (GM) also fell
after reporting poor quarterly sales
(http://www.marketwatch.com/story/gm-stock-falls-nearly-4-after-companys-q3-sales-2019-10-02-1191122).
Boeing (BA) was lower after a report
(http://www.marketwatch.com/story/boeing-shares-slide-13-on-report-engineer-filed-ethics-complaint-about-737-max-safety-issues-2019-10-02)said
an engineer filed an internal ethics complaint over the company's
decision to reject a safety system for the 737 Max on cost grounds
that he believed could have reduced risks tied to two fatal
crashes.
How did other markets trade?
The yield on the 10-year U.S. Treasury note was down nearly 4
basis points to 1.61% on Wednesday morning.
In commodities markets, West Texas Intermediate crude-oil for
November delivery was down 85 cents, about 1.5%, to $52.80 a barrel
on the New York Mercantile Exchange.
Gold for December delivery jumped $12.40, nearly 0.9%, to reach
$1,501.90 an ounce.
In Asia, Chinese equity benchmarks were closed in observance of
the 70th anniversary of Communist rule. Japan's Nikkei 225
meanwhile, fell 0.5%, wiping out a similar loss from Monday.
European stocks traded lower, with the Stoxx Europe 600 down
1.6%.
(END) Dow Jones Newswires
October 02, 2019 11:48 ET (15:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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