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Stocks: S&P Slumps as Weak Manufacturing Data Stuns Traders

Published 01/10/2019, 20:45
Updated 01/10/2019, 22:03
© Reuters.
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Investing.com - Stocks stumbled badly to start the fourth quarter as a weak report on U.S. manufacturing prompted broad selling Tuesday.

The S&P 500 was off 1.23%, with the Dow Jones industrials down 1.3%. The Nasdaq Composite dropped 1.13%. The Dow's 344-point decline was its largest one-day point loss since a 623-point drop on August 23.

The weakness was heaviest in classic industrial stocks like 3M (NYSE:MMM), Dow Inc. (NYSE:DOW), General Motors (NYSE:GM), Ford Motor (NYSE:F) and Caterpillar (NYSE:CAT).

Large-capitalization stocks seemed to weather the selling better than small caps. The SmallCap 2000 NR was off 2.35%.

Plus shares of companies that have done recent initial public offerings were hit. Uber Technologies (NYSE:UBER) and Lyft (NASDAQ:LYFT) were down 4.3% and 3.1% respectively. Uber is off 38% from its high right after shares started trading. Lyft is off 55%.

Railroad stocks fell more than 2.5% as the Dow Jones Transportation Average fell more than 2.3%.

The selloff was set off by a weaker-than-expected report on manufacturing from the Institute for Supply Management. The report showed the ISM's manufacturing PMI falling to its lowest level in 10 years.

The report underscored how stress in manufacturing can be amplified throughout the economy. Manufacturing has been hit by weak export markets, especially China, which has been engaged in a bitter trade battle with the Trump Administration. Negotiators are supposed to meet in Washington later this month.

The selloff hit industrial, materials, energy and financial stocks hardest. Financials were weighed down by Charles Schwab's (NYSE:SCHW) announcement it would no longer charge commissions on stock and ETF trades. Schwab shares fell 9.7%. Other discount brokers that rely on commission revenue were also slammed. ETrade Financial (NASDAQ:ETFC) fell 16.4%.

Apple (NASDAQ:AAPL) managed to stay in the black Tuesday, up 0.28%. Microsoft (NASDAQ:MSFT) was off 1.4%. Both maintained market capitalizations greater than $1 trillion. Amazon.com (NASDAQ:AMZN) was flat. Google parent Alphabet (NASDAQ:GOOGL) was down 1.1%. Cisco Systems (NASDAQ:CSCO) fell more than 3.4%

Crude oil futures moved lower and interest rates also fell as many investors decided the safety of their money was more important than making a killing, at least for now.

While the major indexes finished the third quarter with their best nine-month performances since 1997, they have struggled since hitting new highs in July. The S&P 500 is off nearly 2.8% from its July peak, with the Dow 2.8% below its peak and the Nasdaq down 5% from its peak.

The S&P 500 suffered its sixth loss in eight trading sessions and has finished under 3,000 for eight-straight sessions. The index is trading just under its 50-day moving average, a key technical indicator for market confidence.

Spice-maker McCormick (NYSE:MKC), Ulta Beauty (NASDAQ:ULTA), Philip Morris International (NYSE:PM) and credit-card processor Visa (NYSE:V) were among the top performers in the S&P 500.

ETrade (NASDAQ:ETFC), Schwab (NYSE:SCHW), oil-and-gas producer Cimarex Energy (NYSE:XEC) and Diamondback Energy (NASDAQ:FANG) were among the S&P 500's biggest laggards.

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