Stocks Close Mixed, Nostrum Lead the S&P 500 Index

US manufacturing contracts for the first time since 2009
David Becker

US stocks were mixed on Thursday with US interest rates continuing to drive market sentiment.  Thursday’s brief inversion flashed another warning sign to the US equity markets. With the 10-year bond down near 1.5% and inflation running near 2%, it’s hard to justify that stocks are not a robust investment. Still, The Federal Reserve struggled to provide a single explanation for why it cut interest rates last month because its officials supported the move for different reasons. Sectors were mixed, led by consumer staples and consumer discretionary shares, materials were the worst-performing sector. Nordstrum was the best performing stock in the S&P 500 index rising more than 16%.

Powell is in a Tight Spot

Fed Chairman Jerome Powell ’s challenge which will begin in his speech from Jackson Hole on Friday is to articulate clearly why the central bank is likely to continue reducing rates absent obvious signs of economic deterioration in the US. The real reason is that since the US and China are in a trade war, the Fed needs to reduce rates to keep the markets calm. Absent the Fed, economic growth is likely to contract. With this speech, Mr. Powell can start building a consensus among his colleagues for the next move, which could come at the Fed’s September 17-18 meeting. Fed officials generally supported the July rate cut to cushion the US against a slowing global economy. But minutes of the policy meeting released Wednesday showed they saw the risks differently.

US Manufacturing Contracts

In an ominous sign of forwarding looking indicators, US manufacturer growth slowed to the lowest level in almost 10 years in August, according to Markit. The US manufacturing PMI was 49.9 in August, down from 50.4 in July and below the neutral 50.0 thresholds for the first time since September 2009. Any reading below 50 signals a contraction. Manufacturing had been one of the big winners during the Trump administration, but the tit-for-tat tariffs in the US-China trade war have taken a big bite from the sector. US manufacturing activity slowed to a nearly three-year low in July, based on data from the Institute for Supply Management.

Apple to Unveil 3-New Phones

Apple plans to unveil three new iPhones next month, including two new “Pro” models and a successor to the iPhone XR. The “Pro” models are meant to replace the iPhone XS and iPhone XS Max, according to the report. They’ll be packed with major upgrades to the rear-facing camera, including a sensor for capturing ultra-wide-angle photos and videos, which is a first for Apple. All of the new models are expected to include a new multiangle Face ID sensor, enabling users to unlock their device even if it’s lying flat on a table.

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