A strong jobs report couldn’t offset weak manufacturing data. The Institute for Supply Management’s purchasing managers index slumped to 47.8 in September, down from 49.2 in August and its worst showing in a decade. Then the ISM services index came out on Thursday and it too was disappointing with the index at 52.6, well below forecasts of 55.3. The Dow Industrials gave up nearly 840 points in two days. A more encouraging unemployment report on Friday, however, settled nerves with a 373-point rebound. For the week, the Dow was off just 0.92%. The S&P 500 gave back 0.33% and the Nasdaq composite index fell 0.54%. Sectors were evenly split with technology ahead 1% followed by a gain of nearly as much in health care stocks. Recession fears sent industrials, basic materials and energy names lower, with oil and gas stocks falling 3.7% on a dip in crude prices of $3.10/bbl.
New U.S. tariffs of $7.5 billion on the European Union added to the malaise early in the week, but the negative implications for escalating a trade war with Europe and the poor ISM numbers gave renewed hope for another interest rate cut. The Federal Reserve, sensing such projected business headwinds, could well reduce interest rates again this year. On the consumer side, while we have seen a step-up in personal income growth, there has been a noticeable slowdown in spending as we approach the all-important holiday buying season.
The stock market’s early fourth-quarter weakness is affording nimble investors, with a longer-term view, the opportunity to buy high-quality, dividend paying stocks at more attractive prices.
Here is the answer to last week’s trivia question: Luxury leather and fashion accessory company Coach, Inc., together with its other brands, changed its name in October 2017 to? Miles Cahn & Co., The Leather Factory, Michael Kors or Tapestry, Inc. Answer: Tapestry, Inc., which also includes the Kate Spade and Stuart Weitzman brands.
Today’s Trivia Question: Vacancy rates at U.S. retail malls have been rising as online sales continue to cut into foot traffic. In the third quarter, vacancy rates stood at 7.2%, 8.5%, 9.4% or 10.1%?