U.S. stocks opened lower on Friday after the best day for equities this month, as investors responded to a strike by auto workers as they digested fresh, healthy economic data ahead of next week’s Federal Reserve meeting.
What is going on
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The Dow Jones Industrial Average DJIA lost 19 points, or 0.1%, to 34,885.
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The S&P 500 SPX fell 17 points, or 0.4%, to 4,487.
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The Nasdaq Composite COMP fell 66 points, or 0.5%, to 13,855.
On Thursday, the Dow Jones rose 332 points, or 1%, its biggest gain in five weeks. The S&P 500 rose 0.8%, the biggest single-day gain since August 25, a 25% gain for Arm Holdings ARM,
boosted sentiment during its trading debut.
What drives the markets?
U.S. stocks fell at the open on Friday, paring some of their gains from the previous session, as investors digested economic data that suggested the economy remains resilient ahead of next week’s Fed policy meeting.
The central bank will unveil its latest economic forecasts on Wednesday, along with a decision on interest rates, but is widely expected to leave interest rates unchanged.
Investors’ skittishness was also partly prompted by the onset of a United Auto Workers strike against the Big Three US automakers, Ford F,
General Motors GM,
and Chrysler owner Stellantis STLA,
Some analysts worry that the strike could push up car prices, further fueling inflationary pressures that reemerged over the summer.
The stock losses were underlined by rising Treasury yields, which have weighed on U.S. stocks in recent weeks as borrowing costs have soared to new highs. The yield on the 10-year bond BX:TMUBMUSD10Y rose 4.5 points to 4.332%, approaching its highest level since 2007.
More optimistic 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 indicator that measures activity in New York state rose 21 points to 1.9 in September, the regional Fed bank said Friday. Fed data also shows that U.S. industrial production rose 0.4% in August, slightly better than economists expected.
The latest data on U.S. manufacturing “does not change the broader picture, which is that with global manufacturing still struggling, the outlook for U.S. factories also remains subdued,” economists at Capital Economics said in a written commentary.
Upbeat news from China had earlier helped lift sentiment in global markets, while European shares rose. On Friday, China said its industrial production and consumption improved in August, while investment continued to lose momentum despite Beijing’s increased efforts to boost economic growth.
China’s industrial output grew 4.5% from a year earlier in August, up from a 3.7% increase in July, the National Bureau of Statistics said on Friday. China’s central bank also cut short-term interest rates on Friday, a day after saying it will reduce the amount of deposits banks must set aside as reserves to spur more lending, as the world’s second-largest economy increasingly shows signs of shows a delay.
Investors are also watching the potential for volatility due to the expiration of $3.4 trillion in stock options. The S&P 500 finished lower on 10 of the past 11 expirations in September, according to data from Nomura.
Companies in focus
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Shares of General Motors Co.
G.M.,
+1.80%
fell next to the one in front Ford Motor Co. F,
+0.71%
while Stellantis NV
STLA,
+1.59%
was modestly higher after nearly 13,000 United Auto Workers at the three companies went on strike early Friday when a deadline passed without an agreement with the automakers. The combined strike breaks with the tradition of the UAW, which had focused strike efforts on one auto company to protect the strike fund and the firepower of the picket lines. -
ARM Holdings PLC
ARM,
+0.02%
U.S. depositary receipts added to their gains from their stunning market debut after closing 25% above their IPO price on Thursday, as executives see a big opportunity in saving chipmakers money. -
Adobe Inc. shares ADBE,
-4.00%
fell after the software company forecast revenue in line with Wall Street estimates and stable margins as it rolls out a paid version of its Firefly AI.