The ISM Non-Manufacturing Falls

Yesterday the stock market had its worst day in the past five weeks. The day before was the second-worst day.

The S&P 500 marked its first back-to-back drops of more than 1% since December. We’re still a long way from matching what we saw late last year. In December, there were four 1% drops in a row, and six in seven days.

At its low, the S&P 500 was down 1.4% today.

On Tuesday, the market was shocked by the worst ISM Manufacturing report in more than a decade. This morning, we got the ISM Non-Manufacturing report and it was a disappointment. The reading was 52.6 which was the lowest in three years. Wall Street had been expecting 55.This is noteworthy because the non-manufacturing sector had been holding up well despite weak manufacturing data. It looks like the Fed may act again.

At the start of the week, futures traders saw a 40% chance of another Fed rate cut. Now the odds are up to 75%. We’ll learn a lot more with tomorrow’s jobs report.

Here’s an interesting chart. The 10-year yield is in red (right scale). The black line is the S&P High Beta divided by the S&P 500 (left scale).

Posted by on October 3rd, 2019 at 12:20 pm


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