Wall Street Ends Busy Session Lower

On Tuesday, all three main indexes on Wall Street ended lower for the day, with the trading session volatile as investors were busy assessing the new economic data.

The US markets had opened after a holiday on Monday because of Labor Day and summer vacations.

The data

The Institute for Supply Management (ISM) published a survey showing that there was a rise in the US services industry in the previous month for the second month in a row.

This was due to stronger employment and order growth, while there was an easing in price pressures and supply shortages.

However, the flash composite S&P Global numbers showed that the Purchasing Managers’ Index (PMI) was lower than estimates for the month of August.

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Since the reading on the services sector in the US was stronger than expected, it supported the case that the Federal Reserve would continue to increase the interest rates for reining in inflation.

Market analysts said that the US Fed had made investors data-dependent, so they would not just assess the data individually, but also consider what it would mean in terms of the Fed’s actions.

They added that the worst thing for investors is that there is not enough data to either push the market up solidly or push it down the same way.

The declines

Markets also fell on Tuesday over concerns about how COVID-19 lockdowns would impact the Chinese economy and worries about the energy crisis in Europe.

Market analysts said that a lot of volatility and uncertainty was not happening in US markets, but coming from overseas.

The Nasdaq Composite, which is considered tech-heavy, recorded its seventh straight day of decline, which is the longest losing streak it has had since November 2016.

There was a 1% drop in rate-sensitive shares of Microsoft Corp. and Amazon.com Inc., with US bond yields climbing to their highest levels after June.

There was a 0.8% drop in shares of Apple Inc., which is scheduled to launch its new iPhones in the next week.

Rate hike expectations

Later this month, the US central bank is scheduled to meet and traders have already priced in a 74% possibility of an interest rate hike by three-quarters of a percentage point.

Investors will be focused on the speech of Fed chairman Jerome Powell, which is scheduled for Thursday. Plus, next week will bring consumer price data that will also give clues about the direction of monetary policy.

September had started out weak as it extended a drop that had begun at the end of August because of hawkish comments from policymakers that fueled fears of an aggressive policy tightening.

This year has already seen the S&P 500 record losses of 18%, while a 26% drop has been seen in the Nasdaq Composite because rising interest rates have taken a toll on growth and tech stocks.

The worst performers for the day on the S&P 500 index were communication services and energy, while a rise was recorded in defensive real estate and utilities.

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