Wednesday October 2nd

2-10-2019

Dow set to drop 150 points, continuing its rough start to the fourth quarter amid recession fears

U.S. stock index futures fell sharply on Wednesday as investors worried over the possibility of an economic recession. Around 8:15 a.m. ET, Dow Jones Industrial Average futures pointed to a drop of 150 points at the open. S&P 500 and Nasdaq 100 futures also indicated steep decline. Tech shares fell in the premarket. Facebook and Amazon dropped 1% and 0.8%, respectively. Netflix lost 0.6% while Alphabet slid 0.7%. Industrial shares such as Caterpillar and Union Pacific pulled back more than 1% each. Concern around the economy was sparked on Tuesday after the Institute for Supply Management said U.S. manufacturing activity fell last month to its lowest level in more than 10 years. The weak data sent the major indexes tumbling on Tuesday, the first day of the fourth quarter. The Dow dropped more than 300 points while the S&P 500 slid 1.2%, their biggest one-day drops since Aug. 23. Those losses were enough to wipe out the Dow and S&P 500′s gains for the entire third quarter. Nicholas Colas, co-founder of DataTrek Research, said the market will “want to see real progress” from the upcoming U.S.-China trade talks after the disappointing data. “Markets will be looking for positive commentary from both sides going into this meeting and tangible steps to an agreement immediately after,” he said in a note. Chinese and U.S. officials are scheduled to meet in Washington next week. Both sides have been in a trade war since last year that has rattled investor sentiment and economic growth expectations. Wall Street’s focus remained on the economic data as private payrolls growth slowed down in September, according to a report from ADP and Moody’s Analytics. Payrolls increased by 135,000 in September, a drop from 157,000 in August. The data from ADP and Moody’s Analytics is seen by investors as a preview to the government’s monthly jobs report, which will be released Friday at 8:30 a.m. ET. There are a number of Federal Reserve speeches, including from New York’s Fed President John Williams at 10:50 a.m. ET. Stocks in Asia slipped on Wednesday amid renewed fears of a global economic slowdown. Hong Kong’s Hang Seng index declined fractionally in afternoon trade. Elsewhere, Japan’s Nikkei 225 shed 0.49% to close at 21,778.61. The Topix index also slipped 0.42% to finish its trading day at 1,596.29. Over in South Korea, the Kospi declined 1.95% to close at 2,031.91. Markets in China and India were closed on Wednesday for holidays. Oil prices were mixed on Wednesday as Brent crude extended losses partly in response to weak global stock markets, but U.S. crude rose slightly after industry data showed an unexpected fall in inventories in the United States. Brent crude futures, an international benchmark for oil prices, were down 24 cents at $58.65 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 6 cents to $53.68 a barrel. Front-month WTI prices settled down for a sixth straight session on Tuesday, their longest losing streak this year, after U.S. manufacturing activity dropped to a 10-year low as U.S.-China trade tensions weighed on exports. Gold prices inched down on Wednesday as investors booked profits after the metal rose as much as 1% in the previous session, though dismal U.S. manufacturing data kept a floor under the prices. Spot gold was down 0.1% at $1,476.80 per ounce, as of 0423 GMT. Prices hit a near two-month low of $1,458.50 on Tuesday, before climbing as much as 1% during the session. U.S. gold futures fell 0.4% to $1,482.80 per ounce.