Manufacturing Slowdown Leads to Tech Stock Correction... New York Stock Exchange Loses Direction Ahead of Fed Statements

On the 1st (local time) on Wall Street, the S&P 500 closed down 0.2% at 7,483.23, the Dow Jones Industrial Average fell just under 0.1% to 52,305.24, and the Nasdaq dropped 0.7% to 26,040.03. It was the eighth decline in the past 11 trading sessions, suggesting a breather after the first-half rally.

The morning’s weakness was amplified by June’s ISM manufacturing index missing expectations. Although manufacturing activity remained in expansion territory, it showed slower growth and eased price pressures, prompting Treasury yields to give back some of their earlier gains and fueling hopes that the Fed may not pursue further aggressive rate hikes.

That said, the Fed’s stance remains hawkish. In a separate event, Fed Governor Kevin Warsh stressed the central bank’s political independence and reiterated its commitment to returning inflation to the 2% target. He noted that shrinking the balance sheet will take time but assured markets of ample advance communication, dampening expectations for early policy easing.

On the corporate front, defensive stocks stood out. General Mills jumped 8.5% after beating analysts’ estimates and unveiling plans to cut roughly $3 billion in costs over the next four years. Nike rose 4.9% on better-than-expected results and optimism around its business turnaround, bolstering consumer-sector sentiment.

By contrast, AI-beneficiary chipmaker Micron and other large tech names that drove the first-half rally came under pressure from profit-taking, leading the market lower. Sector-wise, while technology lagged, financials and communication services showed relative strength, partially cushioning the pullback.

Global factors were mixed. Optimism over a thaw in U.S.–Iran tensions and the possible reopening of the Strait of Hormuz sent Brent crude down 1.9% to $71.57 a barrel. At the same time, easing Treasury yields revived safe-haven demand, pushing gold up 1.1% to $4,082.40 an ounce.

Investors are holding back on aggressive bets ahead of Thursday’s June jobs report, weighing the odds of a soft landing and the Fed’s potential for further hikes. With this morning’s manufacturing and employment leading indicators showing cooling, there remains caution that the upcoming payrolls data could significantly reshape market expectations for year-end monetary policy.