A new month kicked off with losses as two things drove markets lower. One was all the new tariffs that went into place on Sunday and the other was the release of unexpectedly weak US factory data. At the closing bell the Dow was off 285 points on heavy trading volume at 26,118. The higher volume reading was somewhat negated by the comparison effects of last week’s light pre-holiday trading.
While both Chinese and US tariffs went into effect on Sept. 1st, China followed up with a WTO suit against the US and as it stands now there does not appear to be any trade meetings set between the two sides. The latest US manufacturing data was ugly and came in lower than expected contracting in August for the first time in three years. The ISM purchasing managers index fell to 49.1 missing guru calls for a reading of 51.1. A reading below 50 indicates contraction. Nine of eighteen industries grew, 7 contracted and 2 were unchanged. The new orders component of the data fell to 47.2. The drop was due to slowing production, orders and hiring and many respondents in the survey noting that supply chain disruption was a big deal as companies look to move out of china. The report also showed that prices paid for raw materials decreased for a third consecutive month which reflects waning demand. The global factory sector has been in the dying cockroach position for 15 months in a row and it appears the US might now be assuming that position as well. The weak factory data prompted a selloff in oil with WTI falling 2.6% to $53.66 per barrel. Meanwhile gold moved up 1.7% to $1,555 an ounce.
Shares of Boeing were down 3% after American Airlines and United pushed their expected 737 Max launch dates into early and mid-December. That coupled with regulators from Europe, Brazil and elsewhere pushing back a meeting with Boeing saying they needed more details from Boeing related to the software that the FAA had approved. This means the 737 Max will not be available for the bulk of Q4 commercial flights which many had been banking on.