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Stock Market Update — Thursday, Oct. 3

Stock Market Update Wall Street Wake-Up Call

The stock market shook off an early stumble and ended broadly higher, breaking a two-day slump that got October off to a miserable start and more in Thursday’s Stock Market Update.

Big technology companies and drug makers led the gains Thursday, while materials makers and banks pulled up the rear.

The early slide was caused by another weak sign on the economy. Growth in the services sector slowed to its lowest level in three years.

Consumer products makers did well, led by a 3% jump in Pepsi after the company reported solid quarterly results.

The uncertainty about the economy mostly stems from the costly and long-running trade war between Washington and Beijing. Traders now also have to factor a potential trade conflict between the U.S. and Europe. The Trump administration imposed tariffs on European goods Wednesday after getting permission to do so from the World Trade Organization.

STOCK MARKET UPDATE

KEEPING SCORE: The S&P 500 rose 23 points, or 0.8%, to 2,910. The Dow Jones Industrial Average rose 122 points, or 0.5%, to 26,201. The Nasdaq rose 87 points, or 1.1%, to 7,872. The Russell 2000 index of small-company stocks also rebounded from an early stumble, gaining 0.4%.

Major stock indexes in Europe were mixed.

ANOTHER WEAK SIGNAL: The Institute for Supply Management, an association of purchasing managers, said Thursday that its non-manufacturing index sank to 52.6 from 56.4 in August. Readings above 50 signal growth, but September’s figures are the lowest since August 2016.

The index tracks a sector that accounts for more than two-thirds of the U.S. economy and which has been mostly resilient in the face of the U.S.-China trade war that has been squeezing American manufacturers.

On Tuesday, a private index of U.S. manufacturing output dropped to its lowest level since the recession year 2009.

SECTORS: Technology stocks notched gains, led by software maker Microsoft, which rose 1.3%, and chipmaker Nvidia, which gained 4.7%.

Pfizer was among the big gainers in the health care sector, climbing 2.1%.

Bank stocks suffered losses as bond yields slumped in another sign that investors are becoming more cautious. The yield on the 10-year Treasury fell to 1.53% from 1.59% late Wednesday. The lower yields hamper a bank’s ability to raise interest rates on loans. JPMorgan Chase dropped 0.1%.

MORE ON THE ECONOMY: Investors are also looking ahead to a key economic bellwether on Friday, the government’s tally of hiring in September. The Labor Department is expected to report that the U.S. employers added 145,000 jobs last month, up from 130,00 in August, according to analysts polled by FactSet.

The prospect of more encouraging economic data could be a factor in the market’s afternoon rebound, said Willie Delwiche, investment strategist at Baird.

“People are maybe stepping back and saying, ‘Hey, we still have another report this week with the jobs data tomorrow, and maybe we got a little too far ahead of ourselves in overreading this non-manufacturing data,’” Delwhiche said.

THE FED: The discouraging economic data this week has also shifted investors’ expectations of further interest rate cuts by the Federal Reserve.

The central bank has lowered rates by a quarter-percentage point twice this year. The odds that the Fed will cut rates again at the end of this month are now running above 88%, according to the CME Group. Meanwhile, expectations that the Fed will lower rates in December are running at round 54%, up from 48% a day ago.

BUBBLY FORECAST: PepsiCo rose 3% after the company told investors it expects to meet or beat its target for revenue growth in 2019. The company set a goal of 4% growth in revenue from existing businesses. The solid forecast followed surprisingly good third quarter profit and revenue.

BUSTED GEAR: Tesla fell 4.1% after the electric car maker fell short of sales forecasts in the third quarter. The company delivered a record 97,000 vehicles, but still fell short of analysts’ forecasts for 99,000 vehicles. Tesla is also lagging behind the pace it needs to reach CEO Elon Musk’s sales goal for the entire year.

LONG EXPOSURE: GoPro plunged 19% after the camera maker cut its profit and revenue forecasts for the year because of production delays. It is shifting shipments of its latest camera, the HERO8 Black, to the fourth quarter.

© The Associated Press. All rights reserved.

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