Stocks fell this morning following a negative report from the Institute for Supply Management on the state of the American service sector, CNBC reports. They recovered this afernoon however following the increased likelihood of further monetary easing from the Federal Reserve.
The ISM’s report found that U.S. services sector fell to its lowest level since August 2016. Its nonmanufacturing index came to 52.6 far below the pessimistic predicitions from a Dow Jones Economist poll of 55.3.
The S&P 500 recovered from the 1% drop that followed the publication of the report. While the Dow Jones Industrial Average was up 9 points following a 335.16 point drop. The Nasdaq Composite traded 0.4% higher after falling around 1.1%.
The Fed is scheduled to meet at the end of the month. Last month, the central bank cut rates for the second time in 2019. The probability of an October rate cut by the Federal Reserve increased following the ISM’s report. Expectations jumped from 77% to 93.5%.
Expanding its combative trade policy the U.S. announced further tariffs against the European Union, with a 10% tariff on European-made Airbus planes, 2% duties on European cheese, French wine and Scottish and Irish whisky
This move comes following the WTO’s ruling in favor of tariffs after years of wrangling over European government subsidies for aircraft maker Airbus. The EU has suggested it will retaliate against U.S. tariffs.
At times of market turbulence, investors tend to flee to assets expected to either retain or increase in value — such as gold, the Japanese yen and government bonds.
Gold prices rose to £1223.46 on Thursday from £1187.97 two days before.
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