Major indexes closed in the negative territory on Tuesday, after the Institute for Supply Management (ISM) released disappointing manufacturing data that raised concerns about U.S. economy.
The Dow Jones Industrial Average declined 1.3% to close at 26,573.04 on Oct 1. The broader S&P 500 and Nasdaq Composite declined as well, shedding 1.2% and 1.1% respectively. The former closed at 2,940.25 and the latter finished the day at 7,908.68. The fear-gauge CBOE Volatility Index (VIX) rose 19% to close at 19.32 on Tuesday. Finally, decliners outnumbered advancers on the NYSE by a 2.76-to-1 ratio.
US Manufacturing Hits Lowest in a Decade
The ISM’s surveyon manufacturing firms for September declined to 47.8%, a sharp decline from July’s 49.1%. The data is indicative of new orders for manufactured goods falling for a second month in a row.
The ongoing U.S.-China trade war and higher tariffs were cited as major reasons for the weakness in manufacturing activities. Both countries are expected to hold talks in October to find a resolution to the trade conflict.
In fact, the World Trade Organization (WTO) said on Oct 1 that trade flows in 2019 are set to rise at the weakest pace since the 2008 financial crisis, which hampered global economy. The weak manufacturing data also raised concerns over a slowing global economic growth and expectations rose of further rate cuts by the Federal Reserve.
President Donald Trump blamed Fed Chair Jerome Powell for the weakness in manufacturing sector, citing that the central bank’s lack of action led to negatively affecting American manufacturers and a stronger greenback. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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