NEW YORK: Wall Street stocks fell on Tuesday (Sept 6), extending an equity downturn as worries about tightening central bank policy and Europe’s energy woes offset good US economic data.
The Dow Jones Industrial Average fell 173.14 points, or 0.55%, to 31,145.3; the S&P 500 lost 16.07 points, or 0.41%, to 3,908.19; and the Nasdaq Composite dropped 85.96 points, or 0.74%, to 11,544.91.
The tech-heavy Nasdaq suffered its seventh consecutive day of losses, its longest losing streak since November 2016.
The American services sector expanded in August, defying expectations for a slowdown amid signs of easing supply issues and slowing price gains.
Countering that positive was ongoing angst about the difficult energy picture facing Europe after Russia continued the suspension of natural gas deliveries to Germany through the Nord Stream pipeline.
A survey from the Institute for Supply Management (ISM) showed the US services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased.
However, numbers from S&P Global showed the services sector Purchasing Managers' Index fell short of flash estimates for August.
The stronger-than-expected reading on the US services sector fuelled expectations that the Federal Reserve will keep raising interest rates to tame inflation.
“Stocks are going to struggle because too much of the economy is doing well and that leaves Wall Street vulnerable to an extended period of rising interest rates,” said Oanda’s Edward Moya. “The dovish pivot and the end of interest rate hikes with the December FOMC is not how this will play out.”
Carol Schleif, deputy chief investment officer at BMO Family Office, said: “The Fed has relegated us to being very data dependent, so every piece of information that comes out investors are going to look not only at the absolute level, but try to infer what that means for when the Fed meets.
“One of the things that is disconcerting to investors is that there’s really little to propel markets either up solidly or down solidly,” she added.
Concerns over the supply of energy to Europe and how Covid-19 lockdowns will impact China’s economy also drove markets down on Tuesday, said Shawn Cruz, head trading strategist at TD Ameritrade. “A lot of uncertainty and volatility is not coming from the US; it’s actually coming from overseas.”
Among individual companies, Signify Health rose 1.1% after announcing a deal to be acquired by CVS Health for about US$8 billion. CVS dipped 0.7%.
Bed Bath & Beyond slumped 18.4% in the aftermath of the suicide of chief financial officer Gustavo Arnal. The slumping retailer named Laura Crossen as acting CFO. – AFP, Reuters