U.S. stocks slumped on Tuesday, at the start of one of the market's historically worst months, ahead of data likely to influence how much the Federal Reserve will lower interest rates.
Market Snapshot
The Dow Jones Industrial Average fell 626.15 points, or 1.51%, to 40,936.93, the S&P 500 lost 119.47 points, or 2.12%, to 5,528.93 and the Nasdaq Composite lost 577.33 points, or 3.26%, to 17,136.30.
Market Movers
Boeing declined 7.3% to $161.02. Shares of the aerospace giant were downgraded to Underweight from Equal Weight at Wells Fargo and the price target was reduced to $119—the lowest on Wall Street—from $185. Meanwhile, Barron’s reported over the weekend that contract negotiations between Boeing and the International Association of Machinists and Aerospace Workers were in their third week, with the contract expiring at 11:59 p.m. on Sept. 12. The union has asked for wage increases of 40% over three years.
Nvidia tumbled 9.5% as the broader market slide hit highflying technology stocks especially hard.
Intel was down 8.8%. A report from Reuters said the stock was at risk of losing its place in the Dow Jones Industrial Average. Reuters also reported that CEO Pat Gelsinger and key executives would be meeting with the chip maker’s board later this month to present a plan to cut costs and shed certain businesses, including Intel’s programmable chip unit Altera. Reuters cited a source familiar with the matter. The stock jumped 9.5% on Friday after Bloomberg reported Intel was discussing various scenarios with investment bankers, including a split of its product-design and manufacturing businesses and what factory projects potentially might be scrapped.
U.S. Steel fell 6% after Vice President Kamala Harris said she opposed the $14.1 billion sale of the steel maker to Japan’s Nippon Steel and the company should remain domestically owned. “ U.S. Steel is a historic American company and it is vital for our nation to maintain strong American steel companies,” Harris said at a campaign event in Pittsburgh.
Freeport-McMoRan was down 6.6% and other copper miners such as BHP and Rio Tinto were falling after Goldman Sachs ended its longstanding recommendation to buy copper and slashed its price forecast for the metal.
Vaxcyte surged 36% after reporting positive results from an early-stage trial of its 31-valent pneumococcal conjugate vaccine candidate. The treatment was well tolerated in 1,015 healthy adults aged 50 and older.
Shares of NIO were up 2.7% after the Chinese electric-vehicle maker delivered 20,176 vehicles in August, up about 4% from last year. Li Auto fell 2.4% after deliveries jumped 38% from a year earlier to 48,122 vehicles, while XPeng gained 4% after the company said deliveries last month rose 3% in August from last year.
Tesla declined 1.6%. The American EV maker sold 86,697 China-made cars in August, according to preliminary data from the China Passenger Car Association on Monday, up 3% from a year earlier and 17% higher than the previous month. Meanwhile, a report from Reuters said Tesla was planning to produce a six-seat variant of its Model Y car in China from late 2025 and has asked suppliers to prepare for an increase in output at its Shanghai factory.
Unity Software rose 2% to $16.70 after analysts at Morgan Stanley upgraded shares of the videogame-engine and ad-monetization company to Overweight from Equal Weight and left their target price unchanged at $22.
Southwest Airlines rose 2.3%. Reuters said activist investor Elliott Investment Management owns 10% of the stock in the carrier, enough to call a special meeting. Elliot and Southwest are scheduled to meet Sept. 9.
Sphere Entertainment dropped 4.4% after Benchmark analyst Mike Hickey downgraded shares to Sell from Hold. Hickey’s downgrade was driven by “concerns over the Sphere’s scalability, high production costs, and a potentially underwhelming profitability outlook.”
Market News
US Manufacturing Mired in Weakness; Construction Spending Falls
U.S. manufacturing contracted at a moderate pace in August amid some improvement in employment, but a further decline in new orders and rise in inventory suggested factory activity could remain subdued for a while.
The survey from the Institute for Supply Management (ISM) on Tuesday also showed manufacturers continuing to pay higher prices for inputs last month. It did not change expectations that the Federal Reserve will cut interest rates by 25 basis points when it kicks off its long awaited easing cycle this month.
US Housing Inflation Likely to Fall in Year Ahead, Fed Paper Says
U.S. housing inflation is likely to ease in the coming year as the gap between supply and demand for homes narrows, according to research published on Tuesday by the Federal Reserve Bank of San Francisco.
That decline will likely add to downward pressure on inflation, the researchers said in the regional Fed bank's latest Economic Letter.
Stubbornly high shelter inflation has added considerably to overall U.S. price pressures in recent years even as the Fed raised borrowing costs aggressively to bring down inflation.
US Small Business Surges, Sentiment Improves, Treasury Report Says
U.S. small business startup applications are surging this year with sentiment improving in the sector after a rocky post-pandemic period as inflation eases, a U.S. Treasury report showed on Tuesday.
The Treasury analysis, released as Vice President Kamala Harris' presidential campaign proposed a 10-fold increase in a tax break for startups, showed that the U.S. is averaging 430,000 new business applications per month so far in 2024. That is 50% more than the average in 2019, the last pre-COVID year of Republican nominee Donald Trump's administration.