Economy Woes Weigh on Wall Street as Investors Eye Labor Data

Wall Street indexes dipped on Wednesday amid renewed concerns about the U.S. economy, spurred by poor manufacturing data and anticipation of labor statistics. Significant losses were noted in tech stocks, further exacerbating the market's historically weak performance for September.

Wall Street indexes faced downward pressure on Wednesday as fresh concerns about the U.S. economy weighed on investor sentiment ahead of critical labor data.

In the prior session, a significant sell-off in technology stocks led to the indexes' largest one-day loss since early August. The market's anxiety grew after data suggested a decline in manufacturing activity, just weeks after weak labor demand had already shaken global markets.

"The disappointing ISM manufacturing index added to the market's jitters, and with key labor figures due on Friday, it's understandable that some positions are being exited," said Arun Sai, senior multi-asset strategist at Pictet Asset Management. Traders are eagerly awaiting the Job Openings and Labor Turnover Survey and Friday's non-farm payrolls report, which may provide hints on the Federal Reserve's upcoming interest-rate decisions.

Market expectations, as per CME Group's FedWatch Tool, show a 61% chance of a 25 basis point rate cut and a 39% likelihood of a 50 basis point cut in September. Additional economic indicators like July factory orders and the Fed's Beige Book are also anticipated on Wednesday.

By 07:13 a.m. ET, the Dow E-minis were down 61 points (0.15%), S&P 500 E-minis declined 22 points (0.40%), and Nasdaq 100 E-minis dropped 138.25 points (0.73%). AI-chip stocks saw substantial declines, with the Philadelphia SE Semiconductor index plunging 7.8% in its worst performance since the COVID-19 pandemic.

Nvidia's stock dipped 2% in premarket trading after reports of a DOJ subpoena related to antitrust concerns. A 10% drop the previous session erased $279 billion from the firm's market value, marking the largest single-day valuation loss for an American company. Other major tech stocks like Tesla, Apple, and Microsoft also posted losses. In addition, Zscaler's disappointing revenue forecast sent its shares plummeting by 15%, while Dollar Tree and Hormel Foods experienced notable declines after downgrading their annual forecasts.

(With inputs from agencies.)