The U.S. equity markets returned from the long Labor Day holiday break to post solid losses, as the execution of additional tariffs between the U.S. and China on September 1st brought trade anxiety back to the forefront, while disappointing manufacturing data globally exacerbated economic growth concerns. Increased Brexit uncertainty, ongoing protests in Hong Kong, and Hurricane Dorian threatening the eastern U.S. shoreline added more wrinkles to the tapestry. Treasury yields were lower and the U.S. dollar was only slightly higher after trimming a solid early advance, while crude oil prices fell and gold rallied. News on the equity front was light, with Conn’s gaining solid ground following its earnings report.

The Dow Jones Industrial Average (DJIA) fell 285 points (1.1%) to 26,118, the S&P 500 Index lost 20 points (0.7%) to 2,906, and the Nasdaq Composite declined 89 points (1.1%) to 7,874. In moderate volume, 849 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil moved $1.16 lower to $53.94 per barrel and wholesale gasoline was down $0.06 at $1.47 per gallon. Elsewhere, the Bloomberg gold spot price rose $16.29 to $1,545.58 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.1% to 98.99.

The August Institute for Supply Management (ISM) Manufacturing Index declined to 49.1 from July’s 51.2 level, and versus the Bloomberg forecast of a slight increase to 51.3. This was the first move into contraction territory (a reading below 50) since August 2016, as new orders fell 3.6 points to 47.2 and new export orders dropped 4.8 points to 43.3. Production and employment also signaled contraction. Prices ticked higher to 46.0. The ISM said comments from the survey said trade remains the most significant issue, and respondents expressed slightly more concern about U.S.-China turbulence.

The final Markit U.S. Manufacturing PMI Index was revised higher to 50.3 for August, versus expectations of a modest upward adjustment to 50.0, but remained slightly below July’s 50.4 level. A reading above 50 denotes expansion. The release is independent and differs from ISM’s report, as it has less historic value and Markit weights its index components differently.

Construction spending ticked 0.1% higher month-over-month (m/m) in July, versus projections of a 0.3% increase, and following June’s favorably-revised 0.7% drop. Residential spending rose 0.6% m/m and non-residential spending declined 0.3%.

Treasuries finished higher, as the yield on the 2-year note dropped 4 basis points (bps) to 1.47%, the yield on the 10-year note fell 2 bps to 1.48%, and the 30-year bond rate was flat at 1.96%.

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