U.S. stocks fell on Tuesday to kick off a historically difficult month for markets as attention turned to a week of labor data highlighted by the key monthly jobs report.
The Dow Jones Industrial Average ( ^DJI ) was down nearly 0.5% after a winning session booked ahead of the Labor Day holiday. The S&P 500 (^GSPC) fell 0.6%, while the Nasdaq Composite (^IXIC) retreated 0.8%.
As Wall Street eases after a rollercoaster August, with the prospect of a tumultuous September ahead, they are retreating from near their highs. Investors are assessing the risk of a data shock or surprise in the presidential race in a month that is usually terrifying for traders.
Most important is the August jobs report due out on Friday, which could influence how deeply the Federal Reserve cuts interest rates at this month’s meeting. As inflation eases, policy makers are on standby for the labor market to settle down.
For investors, the focus is on whether signs of a slowdown in the July jobs report were overblown or an early warning of a broader slowdown. Any sign of stress should put pressure on the Fed to cut interest rates. As of early Tuesday, traders were pricing in a 31 percent chance of a 50-basis-point cut instead of 25 basis points, according to the CME FedWatch Tool.
Reports on U.S. manufacturing activity for August will provide an early glimpse into the economy’s strength later Tuesday, a potential catalyst for a rate cut reset.
Meanwhile, as Election Day approaches, investors are keeping an eye on the headwinds of the US presidential race. Shares of U.S. Steel ( X ) fell in morning trading after Democratic nominee Kamala Harris said the company should remain American-owned and faced a proposed takeover of Japan’s Nippon Steel.
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