[New York Stock Exchange] Manufacturing Index Misses Expectations...All Major Indices Fall

Early Gains on Strength in AI Stocks
Downward Pressure After ISM Manufacturing Index Misses Expectations

Despite the bullish momentum in AI-related stocks, all three major indexes on the New York Stock Exchange closed lower on October 1 (local time) as the September ISM Manufacturing Index in the United States came in below expectations, and rising international oil prices and Treasury yields weighed on investor sentiment.

As of 10:17 a.m. on the New York Stock Exchange, the Dow Jones Industrial Average was trading at 50,705.71, down by 200.34 points (0.39%) from the previous session. The large-cap S&P 500 index was down 10.92 points (0.14%) at 7,640.62, while the tech-heavy Nasdaq Composite was down 24.74 points (0.09%) at 26,836.32.

The New York Stock Exchange. New York, USA. Photo by Yoonju Hwang

The market initially trended upward, led by strength in AI-related stocks, but downside pressures intensified as the manufacturing index missed expectations.

The US Institute for Supply Management (ISM) announced that the September Manufacturing Purchasing Managers' Index (PMI) was 54.5, down 0.1 points from the previous month and lower than market expectations. However, the index stayed above the expansion/contraction threshold of 50 for the ninth straight month, marking the longest expansion streak since 2022.

Investor optimism toward AI companies was the main driver behind early gains. Micron announced that surging memory demand due to increased AI investment caused its revenue last quarter to more than quadruple. The company also projected earnings for this fiscal quarter that exceeded market expectations. These robust results had a positive effect on other semiconductor and AI-related stocks.

However, Micron specified that increased employee compensation would put pressure on profit margins. Micron CEO Sanjay Mehrotra told CNBC, "We are very pleased and proud to be able to reward our employees commensurate with our record-breaking performance."

Alphabet also saw its share price climb about 2% early in the session after unveiling its latest Gemini model. While tech stocks continued to support the market as they did last month, many other stocks outside of the technology sector either weakened or remained flat.

On the other hand, Treasury yields rose to their highest levels in decades, putting additional pressure on the stock market. According to CNBC, the yield on the benchmark 10-year U.S. Treasury Note climbed as high as 5.342% during intraday trading, its highest level since April 2002. The yield on the 30-year Treasury Bond reached 5.663%.

International oil prices also continued to rise. On the New York Mercantile Exchange, November delivery West Texas Intermediate (WTI) crude was up 1.05% at $91.37 per barrel. On the ICE Futures Exchange, December delivery Brent crude was trading at $101.05 per barrel, up 2.97% from the previous session.

Remarks by Federal Reserve policymakers also left the door open for further rate hikes. On this day, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, told Bloomberg TV that he does not know to what level rates must be raised to bring inflation under control.

He said, "We will do whatever is necessary to bring inflation down to the target level," adding, "Ultimately, the question is how high rates need to go, but even I do not know the answer." He further emphasized that stabilizing prices amid supply shocks over the past five years is a critical role of the Federal Reserve.

In the market, attention focused on whether corporate earnings could offset the pressures from high oil prices and elevated interest rates. Tracie McMillion, Head of Global Asset Allocation Strategy at Wells Fargo Investment Institute, said, "These factors still act as headwinds, but corporate earnings have demonstrated resilience," adding, "The key question is whether strong earnings can continue even in an environment of higher borrowing costs."

This content was produced with the assistance of AI translation services.