Dow down 3.1% so far this quarter, wiping out the 1.2% gain last quarter, but remains up 11.8% for the year
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U.S. stocks continued their slide Wednesday and posted the worst start to a quarter since 2008, with data showing slower job creation adding to concerns about a weakening manufacturing sector as President’s Trump’s trade policies take their toll.
Automobile manufacturers stocks fell after quarterly sales reports from Ford and General Motors added to concern over profit margins in the industry. All 11 S&P 500 sectors were down with industries sensitive to economic growth dropping most. The last time all 11 sectors fell for two straight days was December 24, 2018.
The Dow and S&P 500 are now both below their 100-day moving averages.
Read: Dow, S&P 500 on track for worst start to a quarter since 2008 financial crisis as recession fears accelerate
What’s driving the stock market?
A private-sector employment report from Automatic Data Processing showed that a modest 135,000 jobs were created in September, and the average monthly job growth for the past three months also fell to 145,000 from 214,000 for the same time period last year.
The ADP payrolls report was published ahead of the more closely followed U.S. Labor Department’s nonfarm-payroll report due on Friday.
The Alanta Federal Reserve’s GDPNow forecast for U.S. economic growth in the fourth quarter has fallen 1.8%.
Market participants are hoping the Federal Reserve will cut interest rates again when it meets in October, but the Fed may be reluctant to lower rates again after two cuts so far this year.
New York Fed President John Williams on Wednesday pushed back on market fears of a looming recession, saying that the baseline economic forecast remains “a positive one.”
“Right now, the outlook is actually very favorable,” Williams said during a talk at the University of California, San Diego. He said GDP growth is around 2% rate, with a “very strong” labor market and inflation near a 2% rate.
In international trade news on Wednesday, the U.S. won World Trade Organization backing for tariffs on EU goods in an Airbus case over what the Trump administration said was illegal subsidies granted to Airbus. The Trump administration will put tariffs on $7.5 billion of imports from the EU as a result, the Wall Street Journal reported.
Meanwhile, the U.S. and China are due to resume talks next week on resolving the trade dispute between the world’s two largest economies.
“Supportive central banks, bearish sentiment and attractive yield opportunities are supportive of stocks,” Bank of America Securities said in a note. But “trade tensions, global growth concerns, geopolitical risks plus signs of (profit) margin compression and further downward risk to (earnings) estimates are likely to limit upside going forward,” the bank said.
Read: Stocks just delivered a reminder about October’s reputation for volatility
Which stocks are in focus?
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