U.S. Stocks Move Sharply Lower Following Disappointing Economic Data
October 3, 2023Stocks have moved sharply lower in morning trading on Tuesday, more than offsetting the gains posted in the previous session. The major averages have all moved to the downside on the day, with the Nasdaq and the S&P 500 falling to their lowest intraday levels in over three months.
The major averages have climbed well off their worst levels in recent trading but remain firmly negative. The Nasdaq is down 125.86 points or 1.0 percent at 13,145.46, the S&P 500 is down 40.13 points or 0.9 percent at 4,297.31 and the Dow is down 242.82 points or 0.7 percent at 33,764.06.
Early selling pressure picked up following the release of separate reports showing a sharp pullback in new home sales and a significant deterioration in consumer confidence.
The Commerce Department released a report showing new home sales plummeted by 8.7 percent to an annual rate of 675,000 in August after soaring by 8.0 percent to an upwardly revised rate of 739,000 in July.
Economists had expected new home sales to decrease to an annual rate of 700,000 from the 714,000 originally reported for the previous month.
With the upward revision, the annual rate of new home sales in July was the highest since hitting 773,000 in February 2022.
A separate report released by the Conference Board showed its consumer confidence index tumbled to 103.0 in September from an upwardly revised 108.7 in August.
Economists had expected the consumer confidence index to edge down to 105.8 from the 106.1 originally reported for the previous month.
“Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular,” said Dana Peterson, Chief Economist at The Conference Board. “Consumers also expressed concerns about the political situation and higher interest rates.”
Concerns about the outlook for interest rates also continue to weigh on Wall Street, with JPMorgan Chase (JPM) CEO Jamie Dimon warning in an interview with The Times of India that rates could go as high as 7 percent.
“I am not sure if the world is prepared for 7%,” Dimon said. “I ask people in business, ‘Are you prepared for something like 7%?’ The worst case is 7% with stagflation.”
“If they are going to have lower volumes and higher rates, there will be stress in the system,” he added. “We urge our clients to be prepared for that kind of stress.”
Last week, the Federal Reserve left interest rates unchanged as widely expected but forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated.
Sector News
Retail stocks have shown a significant move to the downside on the day, with the Dow Jones U.S. Retail Index falling by 1.5 percent to a three-month intraday low.
Considerable weakness is also visible among software stocks, as reflected by 1.4 percent loss being posted by the Dow Jones U.S. Software Index.
Gold stocks are also moving lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 1.2 percent.
Interest rate-sensitive utilities and commercial real estate stocks are also seeing notable weakness, moving lower along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slumped by 1.1 percent, while Hong Kong’s Hang Seng Index tumbled by 1.5 percent.
Most European stocks have also moved to the downside on the day. While the U.K.’s FTSE 100 Index is just below the unchanged line, the French CAC 40 Index is down by 0.9 percent and the German DAX Index is down by 1.0 percent.
In the bond market, treasuries have given back ground after an early surge but remain modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.5 basis points at 4.527 percent after hitting a low of 4.483 percent.
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