Stocks tumble on manufacturing woes, GM skids on plant closures
U.S. stocks tumbled Tuesday as weaker than expected reports on U.S. manufacturing and construction spending weighed on investor sentiment.
ISM Manufacturing fell to 47.8 in September, down from 49.1 the prior month, making for the weakest reading since June 2009. A reading below 50 signals contraction.
As for construction spending, the Commerce Department reported a 0.1 percent rise, below the 0.4 percent economists were forecasting. The data point suggests a slowdown in residential projects.
The major U.S. averages fell more than 1 percent across the board.
|I:DJI||DOW JONES AVERAGES||33093.34||+328.69||+1.00%|
|I:COMP||NASDAQ COMPOSITE INDEX||12975.687543||+277.59||+2.19%|
Additionally, General Motors dropped after it announced that 6,000 workers will temporarily be laid off on the closure of a pick-up truck in Silao, Mexico tied to the UAW strike, now in its third week. The plant shutdown means that GM has lost any new supplies of its light-duty Chevrolet Silverado, the company's top-selling U.S. vehicle.
|GM||GENERAL MOTORS CO.||33.29||+0.88||+2.72%|
Adding to the weakness, McDonald's was among the Dow's worst performers after JPMorgan Chase analyst John Ivankoe warned that third-quarter store sales will likely fall short. The drop in the restaurant chain also weighed on consumer stocks.
The S&P 500 dropped, led by industrials and tech shares.
|XLK||TECHNOLOGY SELECT SECTOR SPDR ETF||164.80||+4.55||+2.84%|
|XLI||INDUSTRIAL SELECT SECTOR SPDR ETF||98.34||+0.74||+0.76%|
One bright spot, shares of Apple remained modestly higher, despite the U.S. Trade Representative saying the tech giant must pay tariffs on five China-made components for its new Mac Pro computers.
Elsewhere, banks slipped. In Zurich, Switzerland-based Credit Suisse reported that its chief operating officer resigned for his role in the spying of a former executive.
|BAC||BANK OF AMERICA CORP.||28.30||+0.13||+0.46%|
|JPM||JPMORGAN CHASE & CO.||136.94||+1.27||+0.94%|
|CS||CREDIT SUISSE GROUP AG||0.87||+0.01||+1.74%|
Online brokers also contributed to the selling in financials after Charles Schwab announced that trading stocks and exchange-traded funds in the United States and Canada will be free on its platform beginning Oct. 7. The $4.95 per trade fee will also be dropped for options transactions, but users will still be charged 65 cents for each contract.
|SCHW||THE CHARLES SCHWAB CORP.||53.68||-0.56||-1.03%|
Despite Tuesday's action, the first 10 days of October are when active fund managers have a record bias toward growth stocks over value due to quarterly rebalancing and tax-loss selling, producing outsized gains over the last 10 years, according to Bank of America Merrill Lynch’s Equity and Quant Strategy team.
The S&P 500 eked out a 1.2 percent gain in the third quarter, helping stocks hold on to their biggest year-to-date gains in more than two decades and prolonging the longest bull market on record. The benchmark index has climbed 19 percent this year—its best three-quarter performance since 1997.
In Asia, Japan's Nikkei stock index ended the day up 0.6 percent. Markets in Hong Kong and Shanghai were closed for a national day holiday.
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European markets are slightly lower after weak factory activity data from across the eurozone spurred fears of an economic slowdown.
FOX Business' Ken Martin and The Associated Press contributed to this article.