US stocks opened Q4 with sharp declines on increasing jitters about global growth.
The S&P 500 Index dropped 0.8% or 16 points to 1,957, the Dow Jones Industrial dropped 0.9% or 150 points to 16,892 while the Nasdaq Composite index dropped 1.1% or 47 points to reach 4,446.
According to The Wall Street Journal, Treasury bonds rallied and stocks continued declining after readings on US manufacturing and construction spending failed to meet the expectations of economists.
As reported by the Institute for Supply Management, September’s manufacturing index was 56.6, below the 58.2 forecast. Construction spending for August dropped 0.8%, while there was an expected rise of 0.6%.
The rally in the Treasuries pushed the yield on the 10-year note from 2.509% to 2.422% on Tuesday. The worries about global growth have put pressure on US stocks.
UBS AG head of single stock derivates, Jeff Yu said, “Investors believe the US is a better place to invest, which has historically been bullish. But during those transition periods, that causes some volatility in equity markets.”
Investors have been betting that the stocks will decline, according to Charles Schwab, Randy Frederick, which could show that there are more declines to come.
Frederick said, “It’s going to continue to be volatile.” He added that the S&P 500 might decline 0.6% more to hit 1,950 before advancing.
Companies in the S&P 500 are expected to report a rise of 4.6% in Q3 from last year.
According to USA Today, investors are observing the Hong Kong protests closely. Benchmarks in China and Hong Kong are closed for the next two days due to holidays.
There was a decline of 0.5% in the Japan Nikkei 225 index.
Britain’s FTSE dropped 1%, the DAX of Germany dropped 0.8% while France’s CAC 40 lost 1.1%.
Futures for crude oil increased 1.1% to $92.16 per barrel while futures for gold gained 0.5% to $1,218.00 per ounce.