Stocks started the new week in mixed fashion, and this morning’s futures are pointing to a negative start for the major U.S. indexes. In overnight trading, markets in Asia were mostly down, with Hong Kong stocks sliding 2.7%. Meanwhile, the major European indexes are all in the loss column. Elsewhere, oil prices have moved lower, with West Texas Intermediate down about 0.2%, to around $88.60 a barrel.
Investors are glad to have September in the rearview mirror. The month, in keeping with historical averages, was the worst so far in 2023, with the Dow Jones Industrial Average, S&P 500 index, and the NASDAQ composite posting losses ranging from 4% to 6%. Also of note, this was the second-straight down month for those indexes.
The temporary reprieve from a U.S. government lockdown was not enough to ignite investor enthusiasm on the first trading day of October. Meanwhile, the United Auto Workers strike threatens to derail automotive production, which has yet to fully recover from the pandemic shutdowns and resulting supply-chain shortages. This morning, the 10-year Treasury yield soared to 4.727%, the highest level since the summer of 2007. This was not a good omen, as higher payouts for fixed-income securities tend to reduce demand for equities.
Yesterday, the Institute for Supply Management (ISM) issued its report on manufacturing for the month of September. The release showed that industrial activity marked an 11th straight period of contraction. The latest reading of 49% topped analyst estimates of 47.7% and it matched the second best showing in the past 12 months. (Percentages over 50 indicate expansion, while those below 50 mark a slowdown.) Additionally, the U.S. Census Bureau announced that construction spending for August increased 0.5% above the revised July figure, to about $1.984 billion, marking a year-over-year increase of 7.4%.
Looking at the docket for the rest of the week, tomorrow we get ISM’s report on the services sector. There, activity has been in expansion mode for 39 straight months, and September likely showed a continuation of that trend. The latest monthly Factory Orders report will also be released, with expectations calling for a 0.3% increase for August, compared to the 2.1% decline registered in July.
Friday wraps up the week with the September employment numbers. Wall Street is calling for nonfarm payrolls to be up about 163,000, down from the 187,000 jobs added the month before, and that the unemployment rate will dip to 3.7%, compared to 3.8% in August.
Summing up Monday’s performance for the major indexes, the Dow Jones Industrials shed 74 points or 0.2%, the S&P 500 gained a fraction of a point, and the tech-focused NASDAQ was up 88 points (0.7%). - Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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