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Stocks Lower; Key Jobs Report on Friday

Coming off the long holiday weekend, stocks around the globe finished sharply lower on Tuesday. The S&P 500 fell more than 2% on Tuesday, while the tech-heavy Nasdaq declined by more 3%. Shares of NVIDIA slid more than 9% amid a broader pullback in semiconductor stocks. Tuesday also saw a volatility spike with the VIX index jumping from 15 to around 23.

Weaker-than-expected data on the manufacturing and construction front Tuesday likely played a role in the sell-off, as construction spending declined 0.3% in July, well below forecasts for a 0.1% increase. Concurrently, data from the Institute for Supply Management showed manufacturing in the U.S. slowed for the fifth consecutive month. 

Looking ahead, markets will be focused on this Friday’s jobs report, which is certain to influence the Fed’s upcoming policy decision on Sept. 17. Nonfarm payrolls are expected to post a gain of 165,000 for August, following a string of softer-than-expected prints. In addition, the unemployment rate is expected to fall slightly from 4.3% to 4.2%. A significant miss to the downside could potentially push the Fed to cut rates by 0.50% later this month versus the widely anticipated 0.25% cut.

Source: GSAM, CNBC, JPMorgan, FactSet

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