Highlights
September got off to an ugly start for equities Tuesday after economic data rekindled recession fears. The Dow Jones industrial average fell 1.5 percent, the S&P 500 dropped 2.1 percent, and the Nasdaq plunged 3.3 percent. Bond yields, the dollar and oil prices all dropped.
Another weak reading from the Institute for Supply Management showing ongoing contraction in the manufacturing sector plus softer than expected construction spending figures renewed worries that the economy is headed for a hard landing, not the soft landing the market seemed to anticipate at the end of last week. Unexpectedly poor manufacturing purchasing managers data added to the slowdown picture. September's seasonal tendency to bring selloffs added to investor skittishness and the abruptness of the day's selloff, as did consolidative pressures after the market's nice run to the upside.
Losses in megacaps weighed heavily on the major averages with the Magnificent Seven leading the way down as investors took profits after their recent gains. Among Dow stocks, Boeing, Caterpillar and Intel were the worst performers. The chipmaker dropped as speculation increased that it will be relegated from the Dow because its market cap has fallen so much.
Among sectors, worst were communications services, consumer discretionary, information technology, industrials, materials and energy. Energy stocks were hit as oil prices dropped on the weak demand outlook.
Holding up best were defensive plays consumer staples, real estate and utilities.
Another weak reading from the Institute for Supply Management showing ongoing contraction in the manufacturing sector plus softer than expected construction spending figures renewed worries that the economy is headed for a hard landing, not the soft landing the market seemed to anticipate at the end of last week. Unexpectedly poor manufacturing purchasing managers data added to the slowdown picture. September's seasonal tendency to bring selloffs added to investor skittishness and the abruptness of the day's selloff, as did consolidative pressures after the market's nice run to the upside.
Losses in megacaps weighed heavily on the major averages with the Magnificent Seven leading the way down as investors took profits after their recent gains. Among Dow stocks, Boeing, Caterpillar and Intel were the worst performers. The chipmaker dropped as speculation increased that it will be relegated from the Dow because its market cap has fallen so much.
Among sectors, worst were communications services, consumer discretionary, information technology, industrials, materials and energy. Energy stocks were hit as oil prices dropped on the weak demand outlook.
Holding up best were defensive plays consumer staples, real estate and utilities.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
