Stocks opened lower and stayed there through the close as investors worried about the potential disruption from a major port strike and increasing tensions in the Middle East. The latest round of economic data weighed on sentiment too.
The vote to strike by roughly 50,000 members of the International Longshoremen Association, a maritime workers' union, "is driving uncertainty concerning the availability of goods and their prices in the near term," says José Torres, senior economist at Interactive Brokers.
The fact that we don't know how long the strike will last makes it difficult to measure just how big of an impact it will have on the economy, Torres adds.
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Manufacturing activity stays in contraction territory
Speaking of the economy, the Institute of Supply Management's Manufacturing Purchasing Managers Index (PMI) came in at 47.2% in September – matching what was seen in August. This was the sixth straight month the PMI remained below the 50 level, indicating a contraction in activity.
The weak data illustrates "how high interest rates have been weighing on credit-sensitive sectors, a headwind which is starting to abate as the Fed cuts," says Bill Adams, chief economist at Comerica.
Elsewhere on the economic calendar, data from the Bureau of Labor Statistics showed job openings were up 4.3% month over month to 8 million in August. Economists were anticipating a slight decline in job openings.
"Today's report is yet another indication that labor demand is softening but not collapsing, which is consistent with our view of a slowing economy and job market," says Eugenio Alemán, chief economist at Raymond James.
Stocks close lower after Iranian missile attack
Shortly after today's economic data was released, reports began circulating that Iran launched a missile attack on Israel.
The main indexes closed solidly lower in reaction, with the Dow Jones Industrial Average falling 0.4% to 42,156, the S&P 500 shedding 0.9% to 5,708, and the Nasdaq Composite slumping 1.5% to 17,910.
The escalating geopolitical tensions sent crude oil futures up more than 5% in intraday trading before they settled with a 2.4% gain at $69.83 per barrel. Gold futures rose 0.9% to finish at $2,690.30 an ounce.
CVS Health is reportedly exploring strategic options
Drilling down on equities, CVS Health (CVS) stock fell 2.1% after Reuters reported that the healthcare company is conducting a strategic review of its business, including a potential split into two publicly traded companies.
"CVS' reported decision to pursue a strategic review would not be particularly surprising given the company's recent execution issues," says BofA Securities analyst Allen Lutz, who has mixed feelings about a potential breakup.
While it's easy to assume that CVS-owned insurer Aetna could be more valuable as a standalone company, Lutz notes the subsidiary's underperformance this year "is the main driver of CVS' weak share price, and it is unclear how much investors would reward that business as a standalone entity, especially on current year or next year's earnings."
Apple drops on analysts' iPhone warning
Apple (AAPL) was another notable decliner Tuesday, with the mega-cap stock falling 2.9% and surrendering $104 billion in market value along the way.
Weighing on AAPL was a note from Barclays analyst Tim Long, who said recent supply chain checks point to a massive reduction in orders for a "key semiconductor component" included in iPhones.
Long adds that the data suggests "softer demand" for the iPhone 16 compared to last year and indicates the December quarter is "increasingly at risk" of underwhelming sales.
Ford Motor pops on Goldman Sachs upgrade
On the positive side of the ledger, Ford Motor (F) shares rose 1.8% after Goldman Sachs analyst Mark Delaney upgraded the auto stock to Buy from Hold. "We believe there is a margin opportunity driven by the company's more profitable commercial business," Delaney wrote in a note, adding that cost actions "can help offset industry headwinds."
Most analysts are more skeptical of Ford. According to S&P Global Market Intelligence, the consensus recommendation is Hold.
Boeing pops on potential stock sale
Boeing (BA) shares improved 1.4% after a Bloomberg report suggested the aerospace giant is considering issuing stock to raise $10 billion in cash. The cash could help the company maintain its investment-grade rating as an ongoing strike impacts its cash reserves.
"The magnitude of the strike's impact on BA will be determined by its duration, which remains to be seen," said Jefferies analyst Sheila Kahyaoglu in a September 23 note. She estimates a $1.3 billion impact to free cash flow per month, "which is mostly due to lost 737 deliveries and the corresponding cash payments (around $30 million per on average) coupled with overhead absorption."
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