On Tuesday, US benchmark equity indexes experienced significant losses as two reports indicated that the manufacturing sector remained in contraction during August. The Nasdaq Composite witnessed a sharp slide of 3.3%, settling at 17,136.3, while the S&P 500 declined by 2.1%, ending the day at 5,528.9.
The Dow Jones Industrial Average also fell by 1.5%, landing at 40,936.9, thus retreating from its record close achieved on the previous Friday. Within the sectors, technology stocks suffered the most substantial declines, posting a downturn of 4.4%. Conversely, only consumer staples and real estate sectors managed to show gains during this tumultuous trading day. It is noteworthy that US markets were closed on Monday in observance of Labor Day, which may have exacerbated the volatility experienced on Tuesday. In other economic news, data from the Institute for Supply Management and S&P Global highlighted that the US manufacturing sector remained mired in contraction last month.
A notable weakness in demand contributed to a decline in new orders, indicating underlying issues that need to be addressed to revive the sector. Analysts from Jefferies remarked, "The Federal Reserve's rate cuts will help, but it is looking more and more like it's going to take more than a handful of (25-basis-point) moves to get manufacturing going again." Looking ahead, the ISM and S&P Global's US services sector data for August are set to be released this Thursday, which could provide further insights into the state of the economy. In the bond market, the yield on the US 10-year note decreased by 7.4 basis points to 3.84%, while the two-year yield dropped by 6.2 basis points to 3.87% on Tuesday, reflecting investors' shifting expectations regarding interest rates amidst economic uncertainties. In corporate news, Intel Corporation saw its shares plummet by 8.8%, rendering it the worst performer on the Dow and one of the most significant decliners on the Nasdaq.
This notable drop in share price has raised concerns regarding its future positioning within the Dow, as analysts speculate the possibility of its removal from the index. Reports emerging on Sunday suggested that Intel's Chief Executive, Pat Gelsinger, is preparing to disclose a plan later this month that may involve divesting certain business units and altering capital spending priorities to focus on more lucrative opportunities. Meanwhile, chip manufacturing giant Nvidia Corporation also faced challenges, with its shares declining by 9.5%, marking it as one of the worst performers on both the S&P 500 and Nasdaq. Boeing Company's stocks dropped by 7.3%, placing it as the second-steepest decliner on the Dow after Wells Fargo downgraded its stock rating from equal weight to underweight and adjusted its price target downward from $185 to $119.
On a more positive note, Tilray Brands announced the successful completion of its acquisition of several craft breweries, including Hop Valley Brewing, Terrapin Beer, and Revolver Brewing, from Molson Coors Beverage Company. However, in relation to this acquisition, Bloomberg reported that Molson Coors is reportedly eliminating some of its corporate diversity programs, indicating a broader trend of major corporations retreating from diversity, equity, and inclusion initiatives. Despite these turns of events, shares of Molson Coors lifted by 5.4%, making it the top performer in the S&P 500, whereas Tilray's shares fell by 1.8%. On the earnings front, S&P 500 companies have recorded a notable rise of 11% in their latest quarterly earnings compared to the same period last year, signaling a "better-than-expected" earnings season that is nearing its conclusion, according to Oppenheimer Asset Management. Lastly, in commodities trading, West Texas Intermediate crude oil prices dropped 4.3%, settling at $70.4 per barrel due to concerns of sluggish economic growth in China impacting demand.
Gold prices also experienced a slight decline of 0.2%, landing at $2,523.30 per troy ounce, while silver fell by 2.7%, closing at $28.37 per ounce..