Wall Street ends sharply lower, Treasury yields slip as investors eye Nvidia results, data onslaught
NEW YORK :U.S. stocks extended their selloff and benchmark Treasury yields inched lower as investors embarked on a week of accelerated economic data releases in the aftermath of the longest government shutdown ever in the United States.
Chipmaker Nvidia is due to report quarterly earnings on Wednesday. The artificial intelligence bellwether's results will be scrutinized for signs of waning demand in a sector that has driven much of the stock market's rally over recent months.
All three major U.S. stock indexes churned sharply lower as the session progressed.
"I think we're seeing some follow-through on last week's pullback, particularly in the tech sector focusing on the AI trade," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. "The question is do the valuations justify the stock price?"
"Behind that, there is some concern related to employment and how the AI trade is going to play out in terms of the jobs number in the future and what that looks like to the unemployment numbers," Keator added.
Last week, lawmakers reached an agreement to end what had become the longest-ever U.S. government shutdown, during which an absence of official economic data helped dampen expectations that the U.S. Federal Reserve would implement its third rate cut of the year at the conclusion of next month's policy meeting.
To make up for lost time, this week promises a slew of pent-up reports, including the Labor Department's September employment data slated for Friday.
"There's a great deal of uncertainty about what to expect from several months of data, and over the period of the next several weeks that's going to be a big focus," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
Third-quarter earnings season is winding down, with more than 90 per cent of the companies in the S&P 500 having reported. Of those, 83 per cent have delivered consensus-beating results, according to LSEG data. Aside from Nvidia's hotly anticipated results on Wednesday, retailers Home Depot, Target and Walmart, among others, should shed light on the state of consumer demand.
The Dow Jones Industrial Average fell 557.24 points, or 1.18 per cent, to 46,590.24, the S&P 500 fell 61.72 points, or 0.92 per cent, to 6,672.39 and the Nasdaq Composite fell 192.51 points, or 0.84 per cent, to 22,708.08.
European stocks slipped as market participants shied away from making big bets ahead of long-deferred U.S. jobs data.
MSCI's gauge of stocks across the globe fell 7.98 points, or 0.80 per cent, to 987.45.
The pan-European STOXX 600 index fell 0.54 per cent, while Europe's broad FTSEurofirst 300 index fell 12.66 points, or 0.55 per cent
Emerging market stocks rose 0.93 points, or 0.07 per cent, to 1,386.54. MSCI's broadest index of Asia-Pacific shares outside Japan closed higher by 0.04 per cent, to 714.13, while Japan's Nikkei fell 52.62 points, or 0.10 per cent, to 50,323.91.
Treasury yields dipped amid AI growth concerns, as traders evaluated whether the Fed will cut interest rates next month as delayed inflation and employment reports become available.
The yield on benchmark U.S. 10-year notes fell 1.3 basis points to 4.135 per cent, from 4.148 per cent late on Friday.
The 30-year bond yield fell 1.1 basis points to 4.7348 per cent from 4.746 per cent late on Friday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.6 basis points to 3.608 per cent, from 3.614 per cent late on Friday.
The dollar firmed as the resumption of official U.S. economic data put currency traders on guard, particularly in the aftermath of some non-government data such as ADP's National Employment index, which hinted at softening in the labor market.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.23 per cent to 99.55, with the euro down 0.28 per cent at $1.1588.
Against the Japanese yen, the dollar strengthened 0.44 per cent to 155.21.
Bitcoin fell 1.53 per cent to $92,008.68. The cryptocurrency has erased its year-to-date gain, touching its lowest level since late April. Ethereum declined 1.66 per cent to $3,021.44.
Crude prices dipped after plunging about 4 per cent in the previous session, as investors weighed worries of oversupply with looming sanctions against Russia's Lukoil.
U.S. crude fell 0.3 per cent to settle at $59.91 per barrel, while Brent settled at $64.20 per barrel, down 0.3 per cent on the day.
Gold inched lower in opposition to the firming greenback. Spot gold fell 0.9 per cent to $4,042.39 an ounce. U.S. gold futures fell 1.67 per cent to $4,019.40 an ounce.
