The stock market opened on a cautious note on Tuesday, October 1, 2024, with major indexes experiencing significant declines. The Dow Jones Industrial Average dropped by 251 points, or 0.6%, while the S&P 500 fell by 0.9%. The Nasdaq Composite saw an even more pronounced downturn, declining by 1.2%.
Manufacturing Data Disappoints
The downturn was largely driven by the release of manufacturing data from the Institute for Supply Management (ISM), which showed a contraction in activity for September. The manufacturing index registered at 47.2, below the forecasted 47.6 and mirroring the contraction seen in August. Any figure below 50 indicates a contraction in manufacturing activity.
Market Performance This Year
Despite the current decline, the primary stock market indexes have shown substantial gains this year. The S&P 500, for instance, closed at a record high of 5,762.48 on September 30, marking its 43rd record close of the year. This favorable performance is attributed to a shift towards a more accommodating stance from central banks, improved economic indicators, and new stimulus measures from China.
Investor Sentiment and Economic Outlook
Investors are now eagerly awaiting further indicators of robust economic growth to maintain their support for the stock market. Anticipated interest rate reductions are expected to support ongoing economic expansion, but the recent manufacturing data has introduced some uncertainty. The market is also looking forward to other key economic data, including PMI figures, to gauge the overall health of the economy.
Inflation cooling down in recent months has also been seen as a positive sign, potentially paving the way for lower borrowing costs. However, the immediate focus remains on the upcoming economic data releases and their impact on market sentiment.
