Wall Street Slumps Following Weak Manufacturing Data

NEW YORK (AP) -- U.S. stocks are slumping Tuesday following a disappointingly weak start to a week full of updates on the economy.

The S&P 500 was 1.3% lower in morning trading, coming off a winning week that had carried it to the cusp of its all-time high. The Dow Jones Industrial Average was down 502 points, or 1.2%, from its own record set on Friday before Monday's Labor Day holiday. The Nasdaq composite was 1.7% lower, as of 10:15 a.m. Eastern time.

Treasury yields were also sinking in the bond market after a report showed U.S. manufacturing shrank again in August, as it continues to wilt under the weight of high interest rates. Manufacturing has been contracting for most of the past two years, and its performance for August was worse than economists expected.

"Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty," said Timothy Fiore, chair of the Institute for Supply Management's manufacturing business survey committee.

Worries about a slowing U.S. economy helped send stocks on a scary summertime swoon early last month, but financial markets later rebounded on hopes that the Federal Reserve could pull off a perfect landing for the economy. After jacking its main interest rate to a two-decade high to slow the economy enough to stifle high inflation, the Fed looks set to ease interest rates later this month in hopes of avoiding a recession.

Other reports later this week that could show how much help the economy needs, including updates on the number of job openings U.S. employers were advertising at the end of July and how strong U.S. services businesses grew last month. The week's highlight will likely arrive on Friday, when a report will show how many jobs U.S. employers created during August.

The jobs report has once again become the main event for the stock market each month, taking over from updates on inflation, according to analysts at Bank of America. Many traders are anticipating the Fed will deliver a full percentage point of cuts to interest rates this year, which is a "recession-sized" amount, Gonzalo Asis and other economists and strategists wrote in a BofA Global Research report.

On Wall Street, U.S. Steel fell 3.3% in its first trading after Vice President Kamala Harris said Monday that she opposed the company's planned sale to Japan's Nippon Steel. The Democratic presidential nominee's comments, which echo President Joe Biden's position, came after Nippon Steel Corp. said last week it would spend an additional $1.3 billion to upgrade facilities in Pennsylvania and Indiana, on top of a previous $1.4 billion commitment.

Nippon Steel also reiterated that it expects the transaction to close in the second half of 2024, despite ongoing political and labor opposition.

Nvidia was the heaviest weight by far on the S&P 500 after falling 6%. Its stock has been struggling even after the chip company topped high expectations for its latest profit report. The subdued performance could bolster criticism that Nvidia's and other Big Tech stocks simply soared too high amid Wall Street's rush into artificial-intelligence technology.

In the bond market, the yield on the 10-year Treasury fell to 3.83% from 3.91% late Friday. That's down from 4.70% in late April, a significant move for the bond market.

In stock markets abroad, indexes were lower across much of Europe and Asia.

Worries were also growing about the resilience of China's economy, as recently disclosed data showed a mixed picture. Weak earnings reports from Chinese companies, including property developer and investor New World Development Co., added to the pessimism.