The Dow was deep in the red Wednesday on the heels of a triple-digit loss tied to a dismal manufacturing report and continuing anxiety over a possible recession.
The Dow Jones industrial average had plunged more than 500 points, or more than 1.9 percent, by midday Wednesday. October, a historically volatile month for stocks, got off to a rocky start with a 344-point drop after the Institute for Supply Management’s manufacturing index signaled that September was the worst month for U.S. manufacturing in more than a decade. The slide was the Dow’s worst day since August, wiping away all third-quarter gains in a single day.
President Trump blamed the downturn on “all of this impeachment nonsense, which is going nowhere.” In a tweet midday Wednesday, he said that support by Democrats for an impeachment inquiry is “driving the Stock Market, and your 401K’s down. But that is exactly what the Democrats want to do. They are willing to hurt the Country, with only the 2020 Election in mind!”
Trump’s tweet marked the second time in two days that he has punted the blame when it comes to negative economic news. On Tuesday, in the wake of negative reports about the health of the manufacturing industry, Trump tweeted that “Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected.”
“Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!” he wrote.
The Standard & Poor’s 500-stock index and Nasdaq composite index were also down at least 1.5 percent.
Still, the anxiety on Wall Street wasn’t necessarily pinned to one particular turn of events. Rather, continued impeachment drama in the White House has done little to ease investors’ worries about a recession. And even as markets are frequently jolted by President Trump’s unpredictable trade policies, he recently said that he is under no immediate time pressure to reach a trade deal with China.
A new report Wednesday from ADP and Moody’s Analytics found that the private sector created more jobs than expected in September, even while the pace slowed alongside concerns of a tight labor market.
Companies hired 135,000 more workers in September, according to the jobs report, topping the 125,000 that economists surveyed by the Dow Jones had expected. But the September figure was the slowest since June and brought the 2019 monthly average down to 145,000 — markedly down from the 214,000 for the same period last year. The September numbers were also down from August’s 157,000.
American consumers are increasingly propping up the global economy, but there are concerns that that confidence could begin to slip. U.S. vehicle sales for Ford Motor declined 4.9 percent during the third quarter, the company said Wednesday, with demand for the top-selling F-series pickup starting to slouch. The company’s stock was down 4 percent midday Wednesday.
The National Retail Federation is set to issue its holiday season forecast Thursday.
Tuesday’s manufacturing news erased hopes of a quick turnaround for the industry and bruised Trump’s vows to revive American blue-collar jobs. Manufacturing fell into a “technical recession” in the first half of the year, and the latest ISM data suggests that situation is only growing more grave.
Meanwhile, economists are growing more concerned that the slump in manufacturing could have ripple effects for the rest of the U.S. economy, even as some industries are already feeling the sting of Trump’s trade war. Hiring cooled in August, and Wall Street is frequently riled by Trump’s sudden pronouncements around global trade.
“There is no end in sight to this slowdown, the recession risk is real,” said Torsten Slok, chief economist at Deutsche Bank Securities, in an email to clients Tuesday.
The European markets were on a downturn, with the FTSE down more than 230 points, or 3.2 percent, and the DAX down nearly 300 points, or 2.4 percent. The S&P 500 was also roughly 50 points in the red.
Also on Tuesday, the World Trade Organization downgraded its forecast for global trade growth for this year and next. The U.S.-China trade war and a global economic slowdown spurred economists to project that world merchandise trade volume is expected to rise 1.2 percent in 2019 — markedly slower than the 2.6 percent forecast in April. For 2020, the forecast estimates 2.7 percent growth instead of 3 percent.
The cut forecast came mere weeks after Trump called China a “threat to the world” and said there was little urgency for an interim trade agreement. On Sept. 20, he told reporters he was under no pressure to reach a deal with China before the 2020 election, despite his early insistence that China was eager to return to the negotiation table.