The U.S. stock market continued to decline, with significant drops in technology stocks and a sharp rise in oil prices. Federal Reserve Chairman Jerome Powell's comments dampened expectations for further rate cuts. The market's focus this week is on key economic data, including the September non-farm payroll report, to gauge the Fed's future rate policy.
The Dow Jones Industrial Average fell 159.37 points (0.38%) to 42,170.78, the Nasdaq Composite dropped 324.59 points (1.78%) to 17,864.58, and the S&P 500 index lost 59.28 points (1.03%) to 5,703.20. Technology stocks led the market declines, with notable drops in chipmakers. Nvidia (NVDA), Intel (INTC), and Apple (AAPL, Financial) fell by more than 3%, while Qualcomm (QCOM) and AMD (AMD) dropped over 2%.
On Monday, both the S&P 500 and Dow Jones reached record-high closing levels after Powell indicated that the Fed has no preset path for interest rate policy, hinting at two more rate cuts this year, each by 25 basis points. Following last month's 50-basis-point rate cut, the Fed is likely to proceed with 25-basis-point cuts based on improving economic data.
Traders now see a 40% chance of a 50-basis-point rate cut next month, down from 53% last Friday. They expect a total of 70 basis points of cuts this year. According to Invesco strategist David Chao, global risk assets might perform well by year-end amid resilient economic growth.
September is typically a weak month for U.S. stocks, but this year, all three major indexes posted gains. The Dow rose 1.85%, the Nasdaq gained 2.68%, and the S&P 500 added 2.02%. For the third quarter, the Dow increased by 8.2%, the Nasdaq by 2.6%, and the S&P 500 by 5.53%.
The international dockworkers' strike along the U.S. East Coast and Gulf Coast continues to attract attention. The strike could cost the U.S. economy $3.8 billion to $4.5 billion daily, according to JPMorgan. The impacted ports handle half of U.S. trade volume, disrupting container and automotive shipments but not affecting energy supplies, military shipments, or cruise traffic.
Among economic data, the August JOLTs report showed 8.04 million job openings, higher than the expected 7.65 million. Construction spending in August declined by 0.1% versus an expected 0.1% increase. The ISM manufacturing PMI for September came in at 47.2, matching the previous month's level but below expectations.
The market's focus now shifts to the September non-farm payroll report, which the Labor Department will release on Friday. This data will provide more insights into the U.S. labor market and help gauge the Fed's future rate decisions.
Overseas, Eurozone inflation fell to 1.8% in September, its lowest since mid-2021, raising expectations for a rate cut by the European Central Bank. ECB President Christine Lagarde expressed increased confidence in achieving the 2% inflation target, signaling potential policy adjustments.
Key Stocks to Watch:
Nvidia (NVDA) and Microsoft (MSFT) are expected to lead the AI revolution, potentially growing the AI infrastructure market tenfold by 2027, according to Wedbush Securities. Tesla (TSLA) plans to unveil its Robotaxi model, Cybercab, on October 10, aiming for mass production by 2024. Barclays reported weak demand for Apple's (AAPL, Financial) iPhone 16, maintaining a "sell" rating with a target price of $186. Boeing (BA) considers raising at least $10 billion via new stock issuance to replenish cash reserves. The German antitrust authority has designated Microsoft (MSFT) as a company of "paramount importance" to market competition, subjecting it to stricter oversight. Google (GOOGL) announced a $2 billion investment in new data centers in Malaysia. Meta Platforms (META) will expand its AI investments in Vietnam, including producing VR devices from 2025. Goldman Sachs upgraded Ford (F) to "buy." Raymond James downgraded Disney (DIS) amid pressures on its theme park business. CVS Health (CVS) is reportedly considering a company split.
