US stock futures was traded lower early Friday morning after a sell-off in cyclical companies stocks drove down major indices on Thursday, ending a tumultuous September that marked the S&P 500’s worst month since March 2020.
The S&P 500 lost 1.2% on Thursday, ending the month on its first monthly decline since January, down 4.8% and the largest since March 2020 when the virus outbreak rocked markets and devastated the global economy.
The reference index rose by 14.7% over the course of the year.
SHARES TUMBLE IN THE CHAOS OF CAPITOL HILL, WRAP LOST MONTH
The S&P 500 fell 51.92 points to 4,307.54 points. The Dow Jones Industrial Average was down 1.6% to 33,843.92 while the Nasdaq was down 0.4% to 14,448.58. Small company stocks also lost ground. The Russell 2000 Index lost 0.9% to 2,204.37.
Bond yields fell slightly. The yield on 10-year Treasury bills, a benchmark for many types of credit, fell to 1.48% from 1.50% late Wednesday. A little over a week ago it was only 1.32%.
All sectors of the S&P 500 ended on Red Thursday, with technology stocks, banks, and a mix of consumer goods and services companies making up much of the retreat. More than 90% of the stocks in the index fell.
In recent weeks, economic data has shown that the highly contagious Delta variant has depressed consumer spending and the rebound in the labor market.
The Department of Labor reported that jobless claims rose for the third straight week and were higher than economists expected. The Commerce Department raised its estimate of economic growth to 6.7% in the second quarter, which was slightly better than economists had expected, but it expects growth to slow to 5.5% in the third quarter.
Inflation is another cause for concern. A large number of companies have warned of the impact that rising prices can have on their finances. Sherwin-Williams and Nike are among the many companies that have warned investors of supply chain problems, higher raw material costs, and labor problems.
POWELL OF THE FED SHAPES DIVERSITY FOCUS IN FILLING RESERVE BANK OPENINGS
Investors are still trying to gauge whether these issues are temporary and part of the economic recovery or could last longer than expected. The upcoming round of corporate earnings reports could shed some light on how companies are dealing with these issues.
On Thursday, Congress passed a bill to fund the US government through December 3 and avoid a partial federal shutdown. However, the dispute between Democrats and Republicans over extending the national debt limit remains unresolved.
Homeowners largely declined, following a report showing that average long-term mortgage rates rose above 3% this week for the first time since June. Mortgage rates tend to track the direction of 10-year government bond yields. According to mortgage buyer Freddie Mac, the average interest rate on a 30-year mortgage rose to 3.01%. The rate averaged 2.88% last week and a year ago.
Higher mortgage rates limit the purchasing power of home buyers and can price out potential homeowners. LGI Homes lost 5.1% and PulteGroup lost 4.2%.
Meanwhile, Asian markets collapsed on Friday after Wall Street’s worst monthly loss since the pandemic began.
Tokyo slipped 2.3% and Australia’s benchmark fell 2.2%. The markets in Shanghai and Hong Kong were closed for public holidays.
Japan lifted the pandemic state of emergency on Friday after coronavirus cases fell as vaccinations picked up pace. A quarterly survey by the Bank of Japan found that business sentiment among Japanese manufacturers rose to its highest level in nearly three years.
The results of the “tankan” survey published on Friday showed that the mood among the major manufacturers has risen from 14 to 18. This is the highest value since the end of 2018. The value for non-manufacturers rose only slightly to 2 out of 1.
YELLEN: FEDERAL DEBT COVER SHOULD BE DEALED BY CONGRESS
However, it and various other surveys have found that manufacturers are facing shortages of computer chips and other components amid supply chain and shipping disruptions that could affect recovery from the pandemic.
Tokyo’s Nikkei 225 lost 681.59 points to 28,771.07 while the S & P / ASX 200 lost 2.2% to 7,170.50. The Kospi in Seoul lost 1.6% to 3,018.58. Shares also fell in Taiwan and Southeast Asia.
In other trading on Friday, US benchmark crude rose 8 cents to $ 75.11 a barrel in electronic trading on the New York Mercantile Exchange. On Thursday it rose 18 cents to $ 75.03 a barrel.
Brent crude rose 12 cents to $ 78.43 a barrel.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The dollar slipped from 111.28 yen to 111.22 Japanese yen. The euro was unchanged at USD 1.1580.