U.S. stocks ended sharply lower Tuesday, with the S&P 500 suffering its second-largest decline of the year, as investors pulled risk from markets all around the world ahead of a series of key labor market data releases that could define the Federal Reserve's autumn rate path.
A softer-than-expected reading of August manufacturing activity, which triggered and extended safe-haven rally in the bond market, added to the broader stock downdraft, as did a notable spike higher in the Vix volatility index.
The S&P 500 ended 119 points, or 2.11% lower on the day, with a 9% decline for Nvidia dragging the tech-heavy Nasdaq to a 577 point, or 3.26% retreat to start the month of September.
The Dow, meanwhile, was down 626 points from Friday's record high close, while the Russell 2000 ended 70 points, or 3.18% in the red.
Benchmark 10-year note yields fell 6 basis points to 3.846% while 2-year notes closed out the session at 3.880%.
Updated at 1:45 PM EDT
September slide
Boeing ( BA ) shares are a big drag on the Dow heading into the final hours of trading, with the planemaker falling 7.4% following a rating and price target downgrade from Bank of America.
Matthew Akers, who lowered his rating on Boeing stock to underweight from equal weight, and clipped his price target to $119 per share, said the group had a "generational free cash flow opportunity this decade, driven by ramping production on mature aircraft and low investment need."
Stocks are deepening their opening-day slump heading into the mid-day session, with the S&P 500 last marked 72 points, or 1.29% lower and the Nasdaq down 377 points, or 2.13%.
The Dow, which closed at a record high of 41,573.76 points on Friday was down 422 points. paced by a 7% decline for Intel ( INTC ) .
Updated at 10:07 AM EDT
Manufacturing boost
The Institute for Supply Management's benchmark survey of manufacturing activity showed modest improvement in August, but remains firmly in contraction territory for a fifth consecutive month.
The index's headline reading eased to 47.2, up from 46.8 in July (an eight-month low) but just inside the Street's 47.5 consensus forecast.
Stocks extended their early slump, with the Dow down 445 points and the S&P 500 down 65 points, or 1.15%
Benchmark 10-year notes extended their really, falling to 3.833%, with 3-year notes trading at 3.855%.
Source: ISM
Updated at 9:52 AM EDT
Slumping open
The S&P 500 was marked 47 points lower, or 0.83%, in the opening minutes of trading while the Nasdaq fell 195 points, or 1.1%.
The Dow was marked 305 points lower, while the Russell 2000 fell 13 points, or 0.64%
Benchmark 10-year Treasury notes extended their early rally, taking the yield to 3.844%, while 2-year notes were pegged at 3.881% following a modest downward revision to S&P Global's August manufacturing activity reading.
Stock Market Today
Stocks closed out August with only muted gains, with investors moving out of growth and tech stocks into the safer confines of Treasury bonds and dividend stocks heading into the autumn.
The tech-focused Nasdaq, in fact, is now down 0.11% over the third quarter, having notched a modest 0.6% gain in August following an underwhelming second quarter earnings report from star AI-chip maker Nvidia ( NVDA ) .
Both the Dow Jones Industrial Average and the S&P 500 booked decent August advances, with the latter now up 3.44% for the quarter, thanks in part to the rotation into safety that characterized the final trading weeks.
Wall Street's focus will shift clearly and firmly to the economy this week. Key data on growth in the manufacturing sector are due today at 10 a.m. U.S. Eastern Time and a series of readings on the job market are slated to begin Wednesday as investors look to cement the timing and pace of Federal Reserve interest-rate cuts.
Markets will shift focus to the job market this week as they look to cement the case for Federal Reserve interest rate cuts over the final four months of the year.
Olivier Douliery&solBloomberg via Getty Images
The Labor Department's nonfarm-payrolls report is due Friday, with economists expecting a gain of around 160,000 new jobs and a modest tick lower in the headline unemployment rate to 4.2%.
CME Group's FedWatch suggests traders have locked in bets on a Fed rate cut later this month in Washington, with the odds of an outsized 50-basis-point reduction pegged at around 33%.
Only six S&P 500 companies are expected to report second quarter earnings this week, including tech-equipment maker Broadcom ( AVGO ) , Dick's Sporting Goods ( DKS ) , Hewlett Packard Enterprise ( HPE ) and grocery chain Kroger ( KR ) to close out the reporting season.
Second-quarter-earnings growth has been solid, with collective profits rising 13% from a year earlier to a share-weighted $503.4 billion, paced by the tech and communications sectors.
Earnings growth for the current quarter, which will begin reporting next month, is forecast at around 5.7%, with collective profits of around $513.1 billion, according to LSEG data.
Heading into the start of the trading day on Wall Street, and the final month of the third quarter, futures contracts tied to the S&P 500 suggest a 32-point opening bell decline, while those linked to the Dow are priced for a 228-point pullback from last week's record close.
The Nasdaq, meanwhile, is called 160 points lower, with Nvidia, Apple ( AAPL ) and Amazon ( AMZN ) trading in the red.
U.S. Steel ( X ) shares were an active early mover, falling 7.7% in the premarket to $34.98 following comments from Vice President Kamala Harris that suggested she would not support the steel group's $14.1 billion takeover by Japan's Nippon Steel.
In the bond market, benchmark 10-year Treasury note yields were marked 1 basis point lower from last Friday's close at 3.907% while 2-year notes were pegged at 3.927%.
In overseas markets, European stocks were drifting lower as investors eyed U.S. futures and the spate of jobs data this week, with the Stoxx 600 down 0.26% and Britain's FTSE down 0.4%.
Overnight in Asia, Japan's Nikkei 225 ended 0.04% lower in Tokyo, while the MSCI Asia ex-Japan benchmark slipped 0.51% into the close of trading.
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