Wall Street Kicks Off New Month on a Wavering Tone as Stocks Slump

US stocks ended Tuesday’s session in the red, kicking off the new trading month and a quarter with another bout of market volatility as October began with a selloff for the third consecutive month, fuelled by growing tensions in the Middle East that dampened investor enthusiasm.

Amid global uncertainties and market pressures, investors had previously witnessed stocks rebound from the August and September selloffs, ultimately finishing each month at or near record highs.

In foreign exchange markets, the US dollar was boosted by Tuesday's data showing a resilient U.S. labour market and comments from U.S. Federal Reserve Chair Jerome Powell, who stated that the central bank is “not on any preset course” regarding rate policy.

He indicated that two more quarter-percentage-point cuts could occur this year if the economy performs as expected.

Preliminary data from the NYSE indicate that the blue-chip Dow Jones Industrial Average fell 173.18 points, or 0.41%, to 42,156.97.

The Standard & Poor's 500, the benchmark for the global stock market, declined by 53.73 points, or 0.93%, to 5,708.75, while the tech-heavy Nasdaq Composite dropped 278.81 points, or 1.53%, to 17,910.36.

Meanwhile, the 'Magnificent Seven' mega-cap tech stocks showed mixed results: Nvidia increased by 0.03%, Tesla slipped by 1.4%, Meta (formerly Facebook) rose by 0.7%, and Alphabet gained 0.7%.

Amazon declined by 0.6%, Microsoft lost 2.2%, and Apple fell by 2.9% after a report raised concerns about the demand for the iPhone 16.

In August's economic data, the U.S. had an estimated 8.04 million job openings, up from 7.71 million in July, indicating labour market strength.

This translates to 1.1 available jobs per job seeker, exceeding economists' expectations of 7.682 million.

The latest Job Openings and Labor Turnover Survey (JOLTS) suggests stability in the labour market despite slowing job growth.

Investors are now focused on this week’s main event: Friday's September jobs report (Non-Farm Payrolls), which could significantly influence expectations for the Fed's actions during its November 6-7 meeting.

In bonds, crypto and commodities:

In the U.S. government bond markets, the yield on the 10-year Treasury, which influences mortgage rates and other economy-influencing loans, settled at 3.74%.

The policy-sensitive two-year yield, which closely tracks Federal Reserve interest rate adjustment expectations, closed at 3.61%.

Meanwhile, the bullish cheers faded as the cryptocurrency market lost momentum, with investors processing Powell's comments on interest rates.

Bitcoin, the largest digital currency, slid lower after falling below US$65,000, putting the topside target of US$71,000 on hold. It traded within an intraday range of US$60,195 to US$64,125, closing at US$63,329.

While the broader outlook remains bullish after breaking above US$65,000, this week’s pullback may find initial support at US$61,750, with additional support expected between US$57,300 and US$53,500.

This could create a potential setup for a bounce from these levels.

While notable opportunities exist, traders should exercise caution and closely monitor signals, as increased market volatility due to renewed demand is anticipated.

Effective risk management and adaptable strategies will be crucial for navigating this volatility and capitalising on potential opportunities.

Ethereum mirrored Bitcoin's volatility, trading between US$2,422 and US$2,656 and closing at US$2,449.

Despite several attempts to move higher amid significant volatility, Ethereum needs a close above US$2,870 to regain its bullish momentum and target US$4,000.

Clearing the US$2,870 level is critical for sustaining the bullish outlook and making further gains.

However, a failure to maintain above this level may lead to renewed bearish pressure.

Support is now seen at around US$1,950–US$1,980; reassessment at this level is suggested.

Given the high volatility, traders should remain cautious, monitor prices closely, and apply effective risk management and adaptable strategies to navigate the market and capitalise on potential opportunities.

Precious metal prices remained volatile. Spot Gold rebounded to US$2,660 an ounce due to renewed demand, while silver closed at US$31.28.

In the energy sector, Brent crude, the global benchmark, surged and closed at $74.60, while the U.S. benchmark, West Texas Intermediate (WTI), settled at $70.60.

Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of currencies, surged 101.20.

The Eurodollar was 1.1068, and the British pound finished at 1.3286. The Japanese yen ended lower at 143.92, and the Australian dollar was at 0.6912.

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