Market Snapshot: Dow drops 200 points after best day of September as auto worker strike threatens economy


U.S. stocks saw their losses accelerate on Friday following the best day for equities this month as an auto workers strike threatened to undercut U.S. economic growth while potentially contributing to inflation.

What’s happening

  • The Dow Jones Industrial Average DJIA shed 196 points, or 0.6%, to 34,704.
  • The S&P 500 SPX fell by 41 points, or 0.9%, to 4,464.
  • The Nasdaq Composite COMP declined by 177 points, or 1.3%, to 13,748.

On Thursday, the Dow rose 332 points, or 1%, its biggest gain in five weeks. The S&P 500 rose 0.8% for its largest one-day rise since Aug. 25, as a 25% gain by Arm Holdings ARM, +2.30% in its trading debut helped boost sentiment.

What’s driving markets

The start of a strike of the United Auto Workers against the Big Three U.S. automakers, Ford F, +0.52%, General Motors GM, +1.26% and Chrysler owner Stellantis STLA, +2.02%, was receiving the bulk of the blame for driving U.S. stocks lower on Friday.

But investors were also paying close attention to a fresh batch of economic data on manufacturing and consumer sentiment, while also looking ahead to next week’s Federal Reserve policy meeting.

Some analysts worry that the auto workers strike could drive up car prices, adding more fuel to inflationary pressures that have started to re-emerge over the summer while stoking fears about the impact on the broader U.S. economy.

“It’s unsettling, especially in this period right now where we are starting to see a slowdown in economic data. When you look at the history, there’s a hit to the economy and the hit to jobs that can come from a strike like this,” said Liz Ann Sonders, chief investment strategist at Charles Schwab, during a phone interview with MarketWatch.

Stocks’ losses were underscored by rising Treasury yields, which have weighed on U.S. equities in recent weeks as borrowing costs have climbed to fresh highs. The yield on the 10-year note BX:TMUBMUSD10Y rose 4.5 points at 4.332%, nearing its highest level since 2007.

More upbeat news about the state of the U.S. economy arrived early Friday in the form of the New York Fed’s Empire State business conditions index. The manufacturing gauge which measures activity in New York state rose 21 points in September to 1.9, the regional Fed bank said Friday.  Also, Fed data showed U.S. industrial production rose 0.4% in August, slightly better than economists had expected.

The latest data on U.S. manufacturing “doesn’t change the broader picture, which is that, with global manufacturing still struggling, the outlook for America’s factories remains muted too,” said economists at Capital Economics in written commentary.

Survey data released by the University of Michigan showed consumer sentiment falling for a second month in September: The preliminary reading of the sentiment survey dropped to 67.7 this month from 69.5 in August.

At the same time, the survey showed Americans think inflation will average 3.1% in the next year, down from 3.5% in the prior month and the lowest reading in two and a half years.

Upbeat news out of China had earlier helped to boost the mood across global markets, as European stocks climbed. On Friday, China said its industrial production and consumption improved in August, while investment continued to lose momentum despite Beijing’s increased efforts to stimulate economic growth.

China’s industrial production expanded 4.5% from a year earlier in August, up from the 3.7% increase in July, the National Bureau of Statistics said Friday. Also, China’s central bank cut a short-term policy rate on Friday, a day after saying it will lower the amount of deposits banks have to set aside as reserves to spur more lending as the world’s second-largest economy shows more signs of slowing.

Investors were also paying attention to the possibility of volatility driven by the expiration of $3.4 trillion in stock options. According to data from Nomura, 10 of the past 11 expiration days in September saw the S&P 500 finish lower.

Companies in focus

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