Wall Street Had a Rough Start to September

On Tuesday, US stocks tumbled to their worst day since an early August sell-off after another report raised worries about the economy's health.

• The S&P 500 fell 119.47 points, or 2.1%, to 5,528.93 after a report showed US manufacturing shrank again in August, weighed down by high interest rates.
• The Dow Jones Industrial Average, which set a record before Monday's Labor Day holiday, fell 626.15 points, or 1.5%, to 40,936.093.
• The Nasdaq composite fell 577.33 points, or 3.3%, to 17,136.30.

The worse-than-expected manufacturing data raised worries about the slowing US economy and upped the stakes for the all-important jobs report looming on Friday, the AP reports. Manufacturing has been contracting for most of the past two years, and its performance for August was worse than economists expected.

"Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty," said Timothy Fiore, chair of the Institute for Supply Management's manufacturing business survey committee.

• Worries about a slowing US economy helped send stocks on a scary summertime swoon early last month and at one point briefly knocked the S&P 500 nearly 10% below its record set in July. But financial markets quickly rebounded on hopes that the Federal Reserve could pull off a perfect landing for the economy.

• Other reports are due later this week that could show how much help the economy needs, including updates on the number of job openings US employers were advertising at the end of July and how strongly US services businesses grew last month. The week's highlight will likely arrive on Friday, when a report will show how many jobs US employers created during August.
• The strength of this jobs report, or lack thereof, will likely determine the size of the Fed's upcoming cut to interest rates, according to Goldman Sachs economist David Mericle. If Friday's data shows an improvement in hiring over July's disappointing report, it could keep the Fed on course for a traditional-sized move of a quarter of a percentage point. But if Friday's report is weaker, it could drive the Fed to deliver an outsized cut of half a percentage point from the federal funds rate's current range of 5.25% to 5.50%, Mericle says.

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• On Wall Street, US Steel fell 6.1% in its first trading after Vice President Kamala Harris said Monday she opposed the company's planned sale to Japan's Nippon Steel.
• Nvidia was the heaviest weight by far on the S&P 500 after falling 9.5%. Its stock has been struggling even after the chip company topped high expectations for its latest profit report.
• Stocks of oil and gas companies also helped drag the market lower after the price of crude oil fell more than 4% on worries about how much fuel the global economy will burn.
• Still, it wasn't a complete washout on Wall Street. Roughly 1 in 3 stocks within the S&P 500 climbed, led by those that tend to benefit the most from lower interest rates.

(More stock market stories.)