Weak ISM numbers gave hope to U.S. equities, raising expectations of another interest rate cut by the Federal Reserve to stem a wider economic downturn. Wall Street’s main indexes dropped about 1% after the ISM’s non-manufacturing activity index for September fell to 52.6 from 56.4 the month before and below expectations of 55.0. Still, a reading above 50 denoted an expansion in the sector. But the indexes were back in the positive territory as bets of a Fed rate cut in October jumped to 92.5% from 39.6% on Monday, according to CME Group’s Fed Watch tool. The Fed’s next policy meeting will be held at the end of the month.
Oil extended its longest losing streak in 10 months as the economic data in the world’s biggest economy dropped, prompting investors to flee risky assets. Along with yesterday’s increase in oil inventories gave traders even more reason to sell. The only light on the horizon is that President Donald Trump said on Thursday a delegation from China would come to the United States next week for more trade talks.
“China’s coming in next week. We’re going to have a meeting with them. We’ll see. But we’re doing very well,” Trump said before leaving on a trip to Florida.
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