Wall Street’s main indexes dropped by more than 1% on Tuesday as investors reacted to subdued factory activity data, anticipating the impact of upcoming labor market reports on potential monetary policy easing by the Federal Reserve.
U.S. manufacturing showed a slight uptick in August from an eight-month low in July, with some improvement in employment. However, the overall trend still indicated weak factory activity.
The S&P 500 industrials sector fell over 1.6%, with major stocks like Caterpillar and 3M dragging down the blue-chip Dow.
“The softer PMI surveys released this morning prompted some profit-taking,” said Josh Jamner, investment strategy analyst at ClearBridge Investments. “If we’re aiming for a soft landing instead of a recession, this isn’t what we hoped for. However, Friday’s employment data will be far more crucial for the Fed’s rate cut decisions.”
