MARKET SNAPSHOT
U.S. stocks fell sharply across the board amid indications of a slowing economy. Treasury yields extended their August declines ahead of key labor data due later this week. Oil futures dropped to their lowest level in months amid concerns about weakening Chinese demand and prospects of OPEC+ raising output next month. Gold futures edged lower from recent record highs as the dollar strengthened.
MARKET WRAPS
EQUITIES
Stocks tumbled after renewed worries about a slowing economy gripped investors, echoing a sharp selloff that rattled global financial markets just a month ago.
Major U.S. indexes notched their worst day since Aug. 5. The S&P 500 shed 2.1% and the Nasdaq Composite fell 3.3%. The Dow Jones Industrial Average lost 1.5%.
Traders returned from the Labor Day holiday to data suggesting continuing gloom in the manufacturing sector, rekindling concerns about the health of the economy.
"We have faded this growth scare perhaps too soon," said Arun Sai, senior multiasset strategist at Pictet Asset Management.
Earlier Tuesday, Chinese shares ended mostly higher, supported by auto and software stocks. Capital Economics reckons that Chinese equities could regain some lost ground in the coming months, but the long-term outlook remains bleak due to structural headwinds.
The Shanghai Composite Index fell 0.3% to just above the key 2800 level. The Shenzhen Composite Index rose 1.1% and the ChiNext Price Index added 1.3%. Hong Kong's Hang Seng Index gave back 0.2%, weighed by bank stocks.
Japan's Nikkei Stock Average finished little changed as technology shares erased early gains.
Australia's S&P/ASX 200 slipped 0.1%, pulled to a narrow loss by further weakness among commodity stocks.
New Zealand's NZX-50 shed 0.2%, weighed by weakness among logistics and consumer-related stocks.
COMMODITIES
Oil futures settled at their lowest prices of the year as downbeat economic data from China and a weak reading on the U.S. manufacturing sector fed worries about a slowdown in energy demand.
Speculation over a resolution to a dispute in Libya over control of its central bank, which had reportedly led to a significant disruption in oil production and exports from the country, also contributed to Tuesday's sharp decline in oil prices.
November Brent crude fell 4.9% to settle at $73.75 a barrel on ICE Futures Europe. West Texas Intermediate crude for October delivery fell 4.4% to settle at $70.34 a barrel on the New York Mercantile Exchange.
"Hopes that the U.S. driving season would propel prices to new 2024 highs this summer failed to materialize as demand remained weak in key economic regions like China," said Fawad Razaqzada, market analyst at City Index and Forex.com.
Gold futures fell, but remained close to record highs.
Front month Comex gold for September delivery lost less than 0.2% to settle at $2489.90 per troy ounce.
Despite the day's losses, strong central-bank buying and resilient physical demand imply structural support, said UBS precious metals strategist Joni Teves.
TODAY'S TOP HEADLINES
U.S. manufacturers still mired in slump. Fed rate cuts to help, ISM says, but only after the election.
The numbers: A key barometer of U.S. factories was negative for the fifth straight month, signaling the manufacturing side of the economy is still in a deep slump that might not end until after the presidential election.
The Institute for Supply Management's manufacturing index edged up to 47.2% from an eight-month low of 46.8%. Numbers below 50% signal the manufacturing sector is shrinking.
"Demand remains subdued," said Timothy Fiore, chairman of the ISM survey, "as companies show an unwillingness to invest in capital and inventory due to [high interest rates] and election uncertainty."
Construction spending posts bigger-than-expected drop in July
Construction spending fell in July, as U.S. companies and the government scaled back projects across the nation as interest rates stayed elevated.
Spending on construction projects fell 0.3% in July to $2.16 trillion, the Commerce Department reported Tuesday.
The figure fell short of expectations. Economists surveyed by Dow Jones Newswires and The Wall Street Journal expected construction spending to fall 0.1% in July.
AT&T Strike in Southeast Stretches Into Third Week
A strike by more than 15,000 AT&T workers in the Southeast is stretching into a third week after a federal mediation process to end the standoff broke down.
Wireline technicians, customer-service representatives and other workers across nine states walked off the job Aug. 16 after the telecom giant failed to reach an agreement with Communications Workers of America negotiators on a new contract. The union agreed last week to AT&T's proposal to join talks under the Federal Mediation and Conciliation Service but withdrew Monday.
Richard Honeycutt, CWA District 3 vice president, said the telecom giant used the mediation process as another delaying tactic and hadn't sent representatives empowered to effectively negotiate.
Boeing's stock rocked by analyst's sell call, which sees 25% downside
Shares of Boeing Co. took a beating Tuesday, after Wells Fargo warned investors to get out, as whatever decision the troubled aerospace giant makes on what to do with its cash and debt will likely be bad for the stock.
The stock BA tumbled 8.7% in morning trading, enough to pace the S&P 500's decliners, and to put it on track for the lowest close since Nov. 3, 2022. It was also headed for its biggest one-day selloff since it sank 8.8% on Oct. 26, 2022.
The stock's $15.07 price decline was shaving about 99 points off the price of the Dow Jones Industrial Average DJIA, which was falling 477 points, or 1.2%.
Pivotal Week Ahead in Kroger-Albertsons Case After FTC Lands Early Blows
PORTLAND, Ore.-Antitrust enforcers will go for the knockout punch this week against Kroger's planned acquisition of Albertsons, after landing several blows against the largest-ever proposed grocery merger during the first week of court proceedings.
The Federal Trade Commission is approaching the midpoint of the trial on the $20 billion deal, seeking to persuade an Oregon federal judge to issue an injunction that would block the companies from completing it.
Expert witnesses retained by the FTC will testify in the coming days that grocery prices for everyday Americans could rise if Kroger and Albertsons combine, because they are the two last traditional grocery operators competing head-to-head in markets across the country.