Markets continued to fall sharply on Wednesday, marking one of the worst starts to a quarter for the Dow Jones Industrial Average in over a decade. The nosedive began Tuesday after new data was released that reported a contraction of the U.S. manufacturing sector for the second straight month.
By midday Wednesday, the Dow had plunged roughly 500 points, before rebounding slightly, while the S&P and Nasdaq Indexes were also down. Of the companies listed on the Cheddar 50, an index that tracks primarily media and technology businesses, GM ($GM), Ford ($F), and Snap ($SNAP) had the worst-performing stocks.
The Institute for Supply Management (ISM), a non-profit trade association, found that U.S. manufacturing in September shrunk by 1.3 percent compared to the month prior. The decline marked the sector's lowest point since June 2009, when the nation was in the midst of the Great Recession.
In the report released Tuesday, Timothy Fiore, the chairman of ISM's Manufacturing Business Survey Committee, said that "global trade remains the most significant issue" for U.S. manufacturing. "Overall, sentiment this month remains cautious regarding near-term growth," he added.
Only three of the 18 manufacturing industries that ISM tracks reported growth last month: miscellaneous manufacturing; food, beverage and tobacco products; and chemical products.
In response to the report, President Trump on Tuesday attacked the Federal Reserve for allowing the U.S. dollar to "get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high … Pathetic!"
Several other indicators emerged this week that predicted a global economic slowdown.
On Tuesday, the World Trade Organization warned that enduring trade tensions and weakening economies worldwide are causing a significant decline in global commerce. The instability led the Geneva-based organization to cut its forecast for trade volume growth to just 1.2 percent in 2019, more than 50 percent lower than an earlier estimate.
"Beyond their direct effects, trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards," said Roberto Azevêdo, the WTO's director-general.
Fitch Ratings, a leading London-based financial information firm, also lowered its economic outlook this week, citing similar trade concerns as the WTO. For both 2019 and 2020, Fitch lowered its global GDP growth forecasts by 2 percent, dropping the estimates down to 2.6 percent and 2.5 percent, respectively. The WTO also lowered its trade growth forecast for 2020 from 3 percent to 2.7 percent.