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US manufacturing gauge drops to eight-month low
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Arm Holdings down after tepid Q2 revenue forecast
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Eli Lilly up as weight-loss drug cut heart failure risk in trial
By Chuck Mikolajczak
NEW YORK, -
U.S. stocks kicked off August sharply lower after a round of economic data on Thursday spurred concerns the economy may be slowing faster than anticipated while the Federal Reserve maintains a restrictive monetary policy.
Equities initially opened higher, buoyed in part by gains in Meta Platforms after its quarterly results topped expectations and the Facebook parent issued an upbeat outlook for the third quarter. Its shares closed higher as the biggest boost to the S&P 500.
Early gains, however, evaporated after data showed a measure of
manufacturing activity
from the Institute for Supply Management dropped to an eight-month low in July at 46.8, signifying contraction.
"What you’re seeing now, and you will probably see it for the next month or two, is some kind of consolidation and sideways price action," said Bill Strazzullo, chief market strategist at Bell Curve Trading in Boston.
"The bigger picture bull trend is intact ... But we're in a period now where the market is kind of digesting its gains sideways, back and forth."
According to preliminary data, the S&P 500 lost 76.10 points, or 1.38%, to end at 5,446.20 points, while the Nasdaq Composite lost 405.25 points to 17,194.15. The Dow Jones Industrial Average fell 508.81 points, or 1.25%, to 40,333.98.
August is typically one of the weakest months of the year for stocks.
Other data showed the number of Americans filing new applications for unemployment benefits
increased
to an 11-month high last week, suggesting some softening in the labor market, although seasonal factors also played a role.
Investors will eye the government payrolls report on Friday for any signs of further weakness in the labor market.
Both the S&P 500 and Nasdaq registered their biggest daily percentage gains since February in the prior session, boosted by a rally in chip shares after the Fed kept rates steady, as expected.
Defensive sectors such as utilities and real estate led gains, as geopolitical concerns over rising tensions in the Middle East boosted the dollar and pulled Treasury yields lower.
Declines in megacap names such as Apple and Amazon ahead of their quarterly results due after the closing bell weighed heavily on the tech and consumer discretionary indexes, which were among the worst performing of the 11 major S&P sectors.
Of the 342 companies in the S&P 500 that have reported earnings through Thursday morning, 79.2% have topped analyst expectations, according to LSEG data, slightly above the 79% beat rate over the past four quarters. The estimated earnings growth rate for the quarter is 13.3%, up from 10.6% on July 1.
The small-cap Russell 2000 slumped more than 3% and for its biggest daily percentage drop since Feb. 13. Small caps have been volatile recently as investors rotate between cheaper names and more expensive stocks.
Nvidia slumped in a broader chip stocks selloff sparked by Arm Holdings' conservative revenue forecast and Qualcomm flagging a revenue hit from the impact of trade curbs, dragging those stocks lower.
Moderna plunged after cutting its 2024 sales forecast for COVID-19 and respiratory syncytial virus vaccines by up to 25%.
Eli Lilly rose after trial results showed weight-loss drug Zepbound reduces the risk of hospitalization, death and other outcomes for obese adults with a common type of heart failure.
This article was generated from an automated news agency feed without modifications to text.
