The September slide will likely continue, as index futures fell sharply early Wednesday. Traders will likely wait and watch how labor market data, due this week, develops and its implications for the federal funds rate. Wharton professor and chief economist at WisdomTree Jeremy Siegel He said the report would decide whether the cut would be 25 basis points or double that.
Technology stocks fell in premarket trading, with Nvidia Corporation. NVDA fell more than 1%. CBOE Volatility IndexThe VIX index rose nearly 10% to $22.76. Jobs data from the Labor Department, the Beige Book and some earnings reports are also on traders' radar. If these rule out a recession, traders may go bargain hunting to take advantage of Tuesday's pullback.
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.50% |
| S&P 500 Index | -0.31% |
| Lower | -0.19% |
| R2K | -0.29% |
In pre-market trading on Wednesday, the SPDR S&P 500 ETF Trust SPY fell 0.36% to $550.90, and the Invesco QQQ ETF QQQ fell 0.60% to $459.05, according to Data from Benzinga Pro.
Signs from the last session:
A slump in technology stocks that spilled over into broader market weakness sent stocks sharply lower on Tuesday, with three weak data points serving as the trigger. The Institute for Supply Management’s manufacturing purchasing managers’ index and S&P Global’s final manufacturing PMI came in worse than expected and the Commerce Department said construction spending fell more than expected in July. The string of negative data reignited talk of a recession, putting traders on the defensive.
The averages opened lower and fell sharply in early trading. The sell-off continued despite slower momentum throughout the rest of the session. The tech-heavy Nasdaq Composite closed at its lowest level since Aug. 12 and the S&P 500 at a two-week low. All three indexes fell to their highest level since the Aug. 5 global sell-off.
IT, communication services, energy, industrials and materials stocks were under intense selling pressure, while defensive real estate and consumer staples bucked the downtrend.
| Index | Performance (+/) | Worth |
| Nasdaq Composite Index | -3.26% | 17,136.30 |
| S&P 500 Index | -2.12% | 5,528.93 |
| Dow Industrials | -1.51% | 40,936.93 |
| Russell 2000 | -3.09% | 2,149.21 |
Analysts' Perspectives:
Morgan Stanley's U.S. equity strategy team recommends focusing on defensive companies that prioritize operational efficiency or have durable pricing power, or both. The team led by the firm's chief equity strategist Mike Wilson He noted that cyclical and defensive stocks failed to recover materially, while lower beta stocks continued to show a “very resilient performance” amid mixed data on both the macro and micro fronts.
Wilson estimated that nonfarm payrolls will rise by a more-than-expected 185,000 jobs in August and that the unemployment rate will fall to 4.2%.
Chief Investment Strategist at Carson Group Ryan Detrick He shared a foreboding historical trend. Sharing data showing the second half of September was a big outperformer, he said: “September is not typically a good month for stocks, but remember it's in the second half that the real trouble begins.”
Strat Fund Tom Lee He said investors should be cautious over the next eight weeks, from September through Election Day. In an interview with CNBC, he said he sees weakness as an “opportunity to buy” and said investors should be ready to buy the dip.
Upcoming economic data:
- The Commerce Department will release its July trade balance report at 8:30 a.m. EDT, and economists expect a deficit of $79.1 billion compared with a deficit of $73.1 billion in June.
- The Bureau of Labor Statistics will release the results of its July Job Openings and Labor Turnover Survey (JOLTS) at 10 a.m. ET. The consensus is for 8.1 million job openings, up from 8.18 million in June.
- The Commerce Department is scheduled to release its July factory goods orders report at 10 a.m. EDT. Economists, on average, expect a 5.5% month-over-month increase in factory goods orders for July, compared with a 3.3% drop in June.
- The Federal Reserve will release its Beige Book report at 2 p.m. EDT, which provides anecdotal evidence of economic conditions in the 12 Federal Reserve districts.
See also: How to trade futures
Actions in the spotlight:
- GitLab Inc. GLB-L rose nearly 17% in premarket trading following the company's quarterly results, while PagerDuty, Inc. Customer Service P.S. and Manufacturer: Zscaler, Inc. ZS fell more than 14% each.
- Ciena Corporation HUNDRED, DICK'S Sporting Goods, Inc. DKS, Dollar Tree, Inc. DLTRand Hormel Foods Corporation HRL are among the companies that report their quarterly results before the market opens.
- Reporting after closing included: AeroVironment, Inc. OPENING, C3.ai, Inc. AI, Casey's General Stores, Inc. TIMES, Company: ChargePoint Holdings, Inc. PCT and Company Hewlett Packard Enterprise Energy Efficiency.
Commodities, bonds and global stock markets
Crude oil futures extended their decline and fell below the psychological support of $70 per barrel and gold futures also fell. Bitcoin BTC/USD plummeted to the $56,500 level. The 10-year Treasury bond yield fell 2.6 points to 3.818%.
Asian markets suffered further losses on Wednesday, with Japan's Nikkei 225 index falling by more than 4% due to the strength of the yen. Markets in South Korea and Taiwan, with a strong presence of technology stocks, also fell sharply. Traders reacted to the sell-off that took place on Wall Street overnight. Meanwhile, markets in New Zealand and Indonesia bucked the downward trend.
European stocks were trading lower in early trading.
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