Wall Street experiences heavy losses on Tuesday, with the Nasdaq leading the declines due to pressure from Nvidia and weak manufacturing data in the US. After Monday’s holiday, the US market resumed its activity, focused on the economy and the Federal Reserve’s (Fed) monetary policy.
This comes after an August characterised by a correction in the first days of the month, which then reversed, allowing US indices to again approach their record highs of mid-July, with the S&P 500 reaching 5,667 points (in closing prices).
However, the seasonal trend for September is not encouraging, as the S&P 500 has lost an average of 2.3% in this month over the last 10 years.
WEEKLY HIGHLIGHTS
In addition to Tuesday’s manufacturing data, which although improved in August, came in below expectations and remains in contraction, the next few days will be marked by labour market data.
The important jobs data series will begin on Wednesday with the release of the July JOLTs survey, which counts job openings for the month. On Thursday, the focus will be on the ADP employment survey and weekly jobless claims.
However, the most awaited data of the week will come on Friday with the release of the official August employment report, for which job creation is expected to increase to 165,000 jobs, after June’s data showed a larger than expected cooling with 114,000 new payrolls, raising concerns about the health of US employment.
Also due on Thursday will be data on service sector developments (ISM and PMI for August), which will be highly relevant in assessing the state of the US economy.
MARKET VIEW
‘The market currently anticipates that the Fed will start cutting rates at its September 18 meeting, assuming that it will cut rates by at least 25 basis points and giving a 30% probability of a 50 bp reduction, a probability that could decrease if the labour market remains solid this week,’ explain Renta 4, analysts.
‘The possibility of a downward adjustment in the Fed’s rate cut expectations, together with geopolitical risks (military conflicts, US elections, political situation in France and Germany) and the risk of the yen carry trade unravelling (BoJ Governor Ueda suggests that he will continue to raise rates if Japanese macroeconomic data holds up) make us cautious in stock markets at yearly highs,’ they add.
COMPANIES AND OTHER MARKETS
On the corporate front, Boeing’s stock market fell by more than 7% on the possibility that its employees will go on strike for higher wages.
In other markets, Brent crude oil is down 4.97% ($73.67), the euro is down 0.29% ($1.1038) and gold is down 0.2% ($2,520).
In addition, the yield on the 10-year US bond eases to 3.84%; and bitcoin retreats 0.56% ($58.131).