US close: Stocks slammed following weakest manufacturing data in a decade
US stocks closed sharply lower on Tuesday after the ISM manufacturing index for September came in at its weakest level in a decade.
At the close, the Dow Jones Industrial Average was down 1.28% at 26,573.04, while the S&P 500 was 1.23% weaker at 2,940.25 and the Nasdaq Composite lost 1.13% at 7,908.68.
The Dow closed 343.79 points lower after sentiment took a hit as the Institute for Supply Management's manufacturing index declined to 47.8 from 49.1 in August, missing expectations for an increase to 50.1 and remaining below the 50 mark that separates contraction from expansion. This was also the worst reading since June 2009.
ISM chair Timothy R Fiore said: "Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019. Overall, sentiment this month remains cautious regarding near-term growth."
Chris Beauchamp, chief market analyst at IG, said: "The ISM reading is perhaps yet more evidence that the trade wars are beginning to hit the US economy, as respondents point to lower product demand and a fall in sales orders. This will unnerve investors, who have become used to the US remaining relatively insulated from the effects of trade conflict."
Elsewhere on the data front, US construction spending barely rose in August, with spending up just 0.1%, while data for July was revised down to show flat construction outlays, according to the Commerce Department.
Treasury yields also lost some earlier gains as traders dumped equities in favour of bonds. The 10-year yield was down at 1.654% after rising to around 1.75%, while the 2-year rate dropped to 1.57% from roughly 1.68%.
In corporate news, shares in manufacturers like Honeywell, 3M and Eaton all fell at least 2.8% on the back of the weak data.
Charles Schwab shares fell around 10% after the brokerage announced it was ending commissions on stock trading. TD Ameritrade tumbled more than 20% on the news, while E-Trade shares crashed 17%.