The US manufacturing index rebounded in August from its eight-month low in July, indicating improved employment conditions, but the overall trend still suggests sluggish manufacturing activity.
On Tuesday, September 3, the Institute for Supply Management (ISM) announced that the manufacturing PMI in August was 47.2, a rebound from the lowest level of 46.8 since November set in July. The PMI has been below the threshold of 50 for the fifth consecutive month, but higher than 42.5. According to the ISM, a level of 42.5 usually indicates that the overall economy will gradually expand in the future. Hard data such as manufacturing production and corporate equipment spending indicate that manufacturing is basically stagnant. The sub-index for new orders fell to 44.6. Output further declined, with the sub-index for production falling to 44.8. Despite sluggish orders, manufacturers are facing rising input product prices, possibly due to soaring freight costs. The sub-index measuring the prices paid by manufacturers increased from 52.9 in July to 54.0, indicating that deflation in commodities may have ended for now, but may not have a substantial impact on the slowing inflation. Employment continues to shrink, but at a slower pace, with the employment sub-index rising to 46.0.
"The U.S. Securities and Exchange Commission (SEC) and other regulatory agencies are concerned about this incident and may conduct a deeper examination of NYSE's operations and crisis management mechanisms. Market analysts expect that such technical failures may prompt regulatory agencies to strengthen their supervision and requirements for exchange technology infrastructure."
Spot gold fell nearly 1% intraday, currently trading at $2477.06 per ounce.
(Spot gold 30-minute trend chart source: FX168)
Stock market.
The S&P 500 index fell 1%. The Nasdaq 100 index fell 1.5%. Nvidia led the decline in chip manufacturers. Energy stocks were hit hard as Brent crude oil fell below $75, erasing its gains in 2024. Boeing fell sharply due to analyst downgrades. The Russell 2000 index fell 1.2%.
The yield on the 10-year US Treasury bond fell by 6 basis points to 3.84%. According to an informal survey of bond underwriters, approximately 29 issuers are planning to sell new investment-grade US bonds on Tuesday. The yen rose 1% against the US dollar.
The S&P 500 index is facing a challenging seasonal trend.
The index has averaged a 4.2% decline in September over the past five years.
(Source: Bloomberg)
According to the latest weekly top broker data from Morgan Stanley as of August 29th, net selling in the global stock market last week was led by the US stock market due to hedge funds reducing long positions.
But for hedge funds, it's time to prepare for the potential volatility in the coming months. According to data from the Stock Trader's Almanac, September has historically been the worst month for the S&P 500 index and the Dow Jones Industrial Average.
JPMorgan strategists say that even with the highly anticipated interest rate cut cycle by the Federal Reserve, the stock market rally could still stall near historic highs.
Led by Mislav Matejka, the team is one of the most bearish on the stock market this year. Matejka stated that any policy easing is a "passive" response to slowing growth.
U.S. employment growth is slowing down
It is expected that the number of employment in August will increase, which is consistent with the cooling trend of recruitment.
(Source: US Bureau of Labor Statistics, Bloomberg)
The upcoming US labor market data will enable policymakers to understand the need for further interest rate cuts after the almost certain interest rate cut in just over two weeks.
The employment report for August, which will be released this Friday, is expected to show that the number of employment in the world's largest economy, the United States, will increase by about 165,000 people, according to Bloomberg's median estimate of economists surveyed.
Although the increase in employment numbers is higher than the modest increase of 0.114 million in July, the average increase in employment numbers over the past three months will slow to just over 0.15 million, the smallest increase since early 2021. The unemployment rate in August may tick down slightly from 4.3% to 4.2%.