US stocks closed lower as tensions in the Middle East pushed oil prices higher. Additionally, a surprising rebound in job vacancies and continued weakness in manufacturing PMI raised concerns. Investors are focusing on upcoming economic data, including September's non-farm payrolls, to gauge the Federal Reserve's rate outlook.
The Dow Jones fell 173.18 points (0.41%) to 42,156.97. The Nasdaq dropped 278.81 points (1.53%) to 17,910.36, and the S&P 500 lost 53.73 points (0.93%) to 5,708.75.
Iran launched a massive missile attack on Israel, pushing oil prices higher. Iran's Islamic Revolutionary Guard Corps reported a 80% success rate in hitting targets despite Israel's defense systems. Missiles also targeted Gaza, destroying numerous Israeli tanks. Meanwhile, the Houthi movement announced attacks on commercial ships, further boosting oil prices.
Tech stocks led the market decline, with chip stocks such as Nvidia (NVDA), Intel, Apple (AAPL, Financial), Qualcomm, and AMD dropping. The S&P 500 and Dow Jones had reached record highs days earlier after Federal Reserve Chairman Jerome Powell stated there is no preset path for interest rates, hinting at potential rate cuts if economic conditions warrant it.
Labor market data showed job vacancies at 8.04 million, surpassing the expected 7.655 million. The construction sector saw the largest increase since 2009. Although hiring rates dropped to 3.3%, layoffs remained low. The ratio of job seekers to job vacancies stayed at a three-year low of 1.1 to 1.
The ISM manufacturing PMI for September was unchanged at 47.2, indicating continued contraction. Manufacturing activity has been declining for six consecutive months, reflecting companies' reluctance to invest amid monetary policy and election uncertainties. The PMI data also highlighted supply chain disruptions caused by Boeing's strike and potential strikes at US ports.
Looking ahead, the US Labor Department's September non-farm payrolls report will be crucial for assessing the labor market and Fed's rate direction. Analysts suggest that the Fed may implement further rate cuts if economic indicators remain weak.
Internationally, eurozone inflation fell to 1.8% in September, the lowest since mid-2021, which might prompt the European Central Bank to consider rate cuts. ECB President Christine Lagarde expressed growing confidence in achieving the bank's 2% inflation target.
In key stock moves, Wedbush Securities forecasts Nvidia (NVDA) and Microsoft will lead the AI revolution. Tesla announced an upcoming Robotaxi event. Apple plans to launch new products, while Boeing may issue new shares to raise $10 billion. The German antitrust authority has classified Microsoft as a company of market importance, increasing regulatory scrutiny.
