Stock Market Update

[BRIEFING.COM] The stock market started the fourth quarter on a weak note. There are growing expectations for consolidation activity after a stellar third quarter and today's headlines provided fuel.

Initial reports indicated that the White House was concerned about a potential Iranian strike on Israel. This concern materialized, but subsequent reports suggested that most of Iran's missiles were destroyed by Israel's defense system.

The price action in equities, bonds, and commodities reflected uncertainty around the situation in the Middle East, but also reflected some relief that today's attacks by Iran were largely unsuccessful. 

The major indices moved lower across the board, but closed above their worst levels of the session; Treasuries experienced some safe-haven buying, but opening gains dissipated somewhat by the close; and oil prices settled sharply higher, but pulled back from session highs by the close.

The market-cap weighted S&P 500 declined 0.9% after being down as much as 1.8%. The equal-weighted S&P 500 settled 0.5% lower after trading down as much as 1.1%. The 10-yr note yield, which dropped to 3.70% after the open, settled six basis points lower than Monday at 3.74%. WTI crude oil futures traded above $71.00/bbl at their highs, but settled at $69.74/bbl.

Other contributing factors in today's downbeat session included growth concerns that were stirred by the start of the East Coast and Gulf Coast dockworkers strike, along with another contraction reading (sub-50.0%) for the ISM Manufacturing PMI in September. 

A sizable decline in shares of Apple (AAPL 226.21, -6.79, -2.9%) after Barclays suggested iPhone 16 demand is sluggish also clipped index performance. This price action weighed down the S&P 500 information technology sector (-2.7%), along with declines in Microsoft (MSFT 420.69, -9.61, -2.2%) and NVIDIA (NVDA 117.00, -4.44, -3.7%).

• S&P 500: +19.7% YTD (+5.5% for 11.9% YTD
• Nasdaq Composite: +19.3% YTD
• S&P Midcap 400: +11.3% YTD
• Russell 2000: +8.4% YTD

Reviewing today's economic data:

• The S&P Global US Manufacturing PMI fell to 47.3 in the final September reading from 47.9 in the preliminary reading.
• JOLTS - Job Openings totaled 8.04 million in August, up from 7.711 million in July (revised from 7.673 million).
• The September ISM Manufacturing Index checked in at 47.2% (Briefing.com consensus 47.7%), unchanged from August. The dividing line between expansion and contraction is 50.0%, so the September reading suggests the pace of contraction in the manufacturing sector was the same as the prior month. This was the sixth straight month (and 22nd out of 23) that economic activity in the manufacturing sector contracted.
  • The key takeaway from the report is that it has reinforced the understanding that conditions in the U.S. manufacturing sector are weak, reflected further in the weakening employment index.
• Total construction spending declined 0.1% month-over-month in August (Briefing.com consensus 0.1%) following a downwardly revised 0.5% decline (from -0.3%) in July. Total private construction was down 0.2% month-over-month while total public construction was up 0.3% month-over-month. On a year-over-year basis, total construction spending was up 4.1%.
  • The key takeaway from the report is that new single-family construction weakened further despite sliding interest rates.