U.S. Manufacturing Shrinks In August
Sino-American trade worries plus worse than expected economic data today cooled equity markets. The Institute for Supply Management’s purchasing manager’s index reading of 49.1 is the lowest in three years, down from 51.2 last month. Further, the ISM reading is below the expansion/contraction line of 50, further triggering recession fears. Markit PMI came in at 50.3, its lowest reading since 2009.
The DJIA dropped 400 points in early trading but has recouped some of the losses, down 1.3%at midday. The NASDAQ and S&P 500 followed similar trajectories, down 1% and 0.8% respectively.
New Tariffs In Effect
Trade talks failed to stop the imposition of new Section 301 tariffs that went into effect on September 1. The tariffs, initially set at 10% on $300 billion of various Chinese goods, was raised to include a 15% rate on $112 billion in a tit-for-tat with Beijing that saw retaliatory tariffs of five to ten percent on various U.S. goods.
Trade talks are still set for later this month, according to President Trump, who weighed in today on the status of the trade war and what he believes is at the root China’s trade posture.