BREAKING: Wall Street’s main indexes have just plunged to their lowest levels in a week as investor confidence wanes amidst fresh economic data and caution from Federal Reserve officials. The latest figures show that initial claims for state unemployment benefits dropped by 14,000 to a seasonally adjusted 218,000 for the week ended September 20, according to the Labor Department. This was significantly lower than economists’ predictions of 235,000 claims.
Federal Reserve officials are now expressing hesitancy about further rate cuts, with Chicago Fed President Austan Goolsbee emphasizing the risks of inflation if rates are lowered too quickly. This shift in sentiment has caused expectations for a 25-basis-point rate cut in the Fed’s October meeting to drop to 83.4%, down from 92% earlier this week, as per the CME FedWatch Tool.
In early trading on Thursday, September 21, the Dow Jones Industrial Average fell by 195.89 points, or 0.42%, settling at 45,926.27. Meanwhile, the S&P 500 lost 56.81 points, down 0.86% to 6,581.00, and the tech-heavy Nasdaq Composite declined by 268.81 points, or 1.19%, to 22,228.72.
The tech sector faced significant losses, with major players like Nvidia and Broadcom down 1.3% and 2.8%, respectively. This has led to a 2.2% drop in the broader semiconductor index, highlighting the delicate state of the September rally as markets respond to any shift in economic indicators.
Investor sentiment is further rattled by the looming threat of a government shutdown in Washington. Budget negotiations have stalled, raising fears that a prolonged shutdown could disrupt essential economic data releases, adding to the volatility in the markets.
Analysts are now closely watching the anticipated release of the Personal Consumption Expenditures index on Friday, September 22. This key inflation measure is crucial for shaping future interest rate expectations and could further influence market dynamics.
Among individual stocks, Carmax has hit a five-year low, plummeting 22.3% after reporting lower second-quarter profits due to declining demand. In contrast, Intel saw a rise of 2.4% after news broke that the chipmaker approached Apple for potential investment opportunities. Additionally, IBM gained 2.8% following promising results from its quantum computing partnership with HSBC.
The overall market remains sensitive to changes, with declining issues outpacing advancers by a ratio of 3.48-to-1 on the NYSE and 4.42-to-1 on the Nasdaq. The S&P 500 recorded eight new 52-week highs and eight new lows, while the Nasdaq Composite noted 24 new highs and 50 new lows.
As the situation develops, investors are urged to stay alert for the upcoming economic data that could reshape market expectations and determine the future trajectory of interest rates.
