After the long Labor Day weekend, traders returned to their desks on Tuesday, and the stock market experienced a sharp decline. The major indices have erased the substantial gains made last Friday, with the Dow Jones Industrial Average pulling back significantly from its record high.As of now, the major indices are hovering near the session’s lows. The Dow is down 477.72 points or 1.2 percent at 41,085.36, the Nasdaq has fallen by 412.51 points or 2.3 percent to 17,301.12, and the S&P 500 has dropped 85.62 points or 1.5 percent to 5,562.78.The downturn in stocks began early in the session and intensified after the Institute for Supply Management released data showing continued contraction in U.S. manufacturing activity in August.According to the ISM, the manufacturing PMI inched up to 47.2 in August from 46.8 in July. However, a reading below 50 still indicates contraction. Economists had anticipated the index to rise to 47.5.This data might have heightened concerns about the economic outlook, contributing to the sell-off observed earlier in August.Wall Street also experienced weakness as some traders chose to capitalize on the previous session’s gains amid ongoing uncertainty regarding future interest rates.The Federal Reserve is widely expected to reduce rates in its upcoming meeting later this month, though there’s some debate over the extent of the rate cuts.According to the CME Group’s FedWatch Tool, there is a 61.0 percent chance of a 25 basis point rate cut later this month, compared to a 39.0 percent chance of a 50 basis point cut.Harris Financial Group’s managing partner Jamie Cox said there is no justification for a 50-basis point cut. However, ING Chief International Economist James Knightley noted that a weak jobs report on Friday could still increase the likelihood of a 50bp rate cut.This week’s monthly jobs report is highly anticipated, with economists forecasting an increase of 165,000 jobs in August, following a rise of 114,000 jobs in July.The unemployment rate is projected to dip to 4.2 percent in August from 4.3 percent in July, which was its highest level since October 2021.### Sector NewsSemiconductor stocks have seen a significant decline after their strong performance last Friday, dragging the Philadelphia Semiconductor Index down by 5.7 percent.Oil service stocks have also experienced considerable weakness, as reflected by a 4.6 percent drop in the Philadelphia Oil Service Index.The decline in oil service stocks coincides with a sharp decrease in crude oil prices, with October delivery crude falling $2.70 to $70.85 a barrel.Steel stocks have slumped notably, leading to a 4.2 percent decline in the NYSE Arca Steel Index.U.S. Steel (X) has been a significant contributor to this sector’s decline, falling 3.5 percent after Vice President Kamala Harris expressed opposition to the company’s sale to Japan’s Nippon Steel.Gold, oil producer, and computer hardware stocks are also showing considerable weakness, while utilities stocks are among the few sectors resisting the downtrend.### Other MarketsIn overseas trading, most Asia-Pacific stock markets demonstrated modest weakness on Monday. Japan’s Nikkei 224 Index closed just below the unchanged line, while China’s Shanghai Composite Index dipped by 0.3 percent.European markets also moved lower for the day. The U.K.’s FTSE 100 Index is down by 0.5 percent, the German DAX Index is down by 0.3 percent, and the French CAC 40 Index is down by 0.2 percent.In the bond market, treasuries are regaining ground after several sessions of decline. Consequently, the yield on the benchmark ten-year note, which moves opposite to its price, has decreased by 7.6 basis points to 3.835 percent.The material has been provided by InstaForex Company – www.instaforex.com
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