U.S. equities finished solidly lower following a more than 10-year low in the ISM Manufacturing Index that joined soft reads from the sector out of the Eurozone and U.K. to intensify global growth concerns. Treasury yields and the U.S. dollar were also down on the data, and gold turned to the upside, while crude oil prices were modestly in the red. Equity news was light and took a backseat to the economic data, with McCormick & Company notching gains after the company topped earnings estimates and offered some relatively favorable guidance.
The Dow Jones Industrial Average (DJIA) tumbled 345 points (1.3%) to 26,573, the S&P 500 Index lost 37 points (1.2%) to 2,940 and the Nasdaq Composite declined 91 points (1.1%) to 7,909. In moderate volume, 793 million shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.45 lower to $53.62 per barrel and wholesale gasoline was unchanged at $1.57 per gallon. Elsewhere, the Bloomberg gold spot price rose $8.66 to $1,481.15 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% lower at 99.13.
The September Institute for Supply Management (ISM) Manufacturing Index fell to 47.8 from August’s 49.1 level, and versus the Bloomberg forecast of a slight increase to 50.0. This was the second month in a row the index remained in contraction territory (a reading below 50) and was the lowest since June 2009, as new orders, production, employment and new export orders all signaled contraction. Prices rose 3.7 points to 49.7. The ISM said comments from the survey reflected a continuing decrease in business confidence and global trade remains the most significant issue.
The final Markit U.S. Manufacturing PMI Index was revised slightly higher to 51.1 for September, versus expectations to be unchanged at 51.0, and was above August’s 50.3 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 August, versus projections of a 0.5% increase, and following July’s negatively-revised flat reading. Residential spending rose 0.9% m/m and non-residential spending declined 0.4%.
Treasuries finished higher following the ISM report, as the yield on the 2-year note dropped 7 basis points (bps) to 1.54%, the yield on the 10-year note declined 4 bps to 1.64%, and the 30-year bond rate dipped 2 bps to 2.10%.
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