Stocks rebound from early morning slump a day after Wall Street's worst performance in a month
Stocks are up on Wall Street following an early morning slump a day after the market's worst performance in a month.
The S&P 500 is up 0.3%, or 17 points, as of 10:58 a.m. Eastern time on Wednesday, following a 2.1% drop a day earlier. The Dow Jones Industrial Average is up 186 points, or 0.5%, while the tech-heavy Nasdaq composite is up 0.4%.
World stocks tumbled Wednesday after Wall Street had its worst day since early August, with the S&P 500's heaviest weight Nvidia falling 9.5% in early morning trading, leading to a global decline in chip-related stocks. Investors concerned about the strength of the U.S. economy will be closely watching the latest update on job openings from the Labor Department.
"Investors' concerns about the health of the U.S. economy have intensified again, contributing to a selloff in global equity markets," Shivaan Tandon, markets economist at Capital Economics said in an analysis Wednesday. "Tech stocks appear to have been hit the hardest," he added.
Nvidia stock has been struggling even after the AI chip company topped high expectations for its latest profit report. The subdued performance could bolster criticism that Nvidia and other Big Tech stocks were simply overrated, soaring too high amid Wall Street's frenzy around artificial intelligence technology.
Rising oil supply was also driving down prices, as Libya moved closer to resolving a conflict over control of the country's oil revenue that meant its oil production may soon increase.
Benchmark U.S. crude fell 57 cents to $69.77 a barrel. Brent crude, the international standard, lost 75 cents to $73.00 a barrel.
The S&P 500 sank 2.1% to give back a chunk of the gains from a three-week winning streak that had carried it to the cusp of its all-time high. The Dow Jones Industrial Average dropped 626 points, or 1.5%, from its own record set on Friday before Monday's Labor Day holiday. The Nasdaq composite fell 3.3% as Nvidia and other Big Tech stocks led the way lower.
Treasury yields also stumbled in the bond market after a report showed American manufacturing shrank again in August, sputtering under the weight of high interest rates. Manufacturing has been contracting for most of the past two years, and its performance for August was worse than economists expected.
"Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty," said Timothy Fiore, chair of the Institute for Supply Management's manufacturing business survey committee.
Other reports due later in the week could show how much help the economy needs, including updates on the number of job openings U.S. employers were advertising at the end of July and how much United States services businesses grew In August.
Wall Street analysts expect solid August job numbers when DOL releases its monthly employment data on Friday, which they say should allay the renewed fears about a hard landing.
"We forecast nonfarm payrolls to rise by a solid 200k in August," said Bank of America U.S. economists Shruti Mishra and Aditya Bhave in a note. "The labor market is moderating but gradually."
That said, analysts have not ruled out continued volatility, a hallmark of the month of September.
"September has historically been a poor month for returns, suggesting some seasonality may be playing a role in negative sentiment," Solita Marcelli, chief investment officer americas at UBS Global Wealth Management, said in a research note. "The S&P 500 has declined in September in each of the last four years and seven of the last 10."
All told, the S&P 500 fell 119.47 points to 5,528.93 on Tuesday. The Dow dropped 626.15 to 40,936.93, and the Nasdaq composite sank 577.33 to 17,136.30.
In the bond market, the yield on the 10-year Treasury fell to 3.84% from 3.91% late Friday. That's down from 4.70% in late April, a significant move for the bond market.