Flat markets turned sharply negative as U.S. stocks experienced significant losses after the three-day weekend.
Continuing a trend observed in recent weeks, cryptocurrencies experienced a sharp decline early in the U.S. trading day. About ninety minutes after U.S. stock markets reopened following Monday's Labor Day Holiday, Bitcoin (BTC) fell 1.5% to $57,800, while Ether (ETH) dropped 3% to $2,442, marking its lowest point since early February.
The CoinDesk 20 Index, a broad market gauge, was down just 1% as a few constituents, notably Lumens (XLM) and Litecoin (LTC), posted modest gains. This decline in crypto prices coincided with a notable drop in stocks, including a 2.4% decrease in the Nasdaq and a 1.5% fall in the S&P 500.
U.S. economic data for August is starting to come in, with the ISM Manufacturing PMI report showing continued contraction. The index came in at 47.2, below the expected 47.5 and July's 46.8. The report's details suggest a stagflationary trend, with New Orders falling to 44.6 from July's 47.4, while Prices Paid increased to 54.0 from 52.9.
In response to these soft numbers, traders have increased the likelihood of a 50 basis point Federal Reserve rate cut in September to 39% from 30% the previous day, according to CME FedWatch. However, the prevailing expectation remains for a 25 basis point cut at 61%.
The key upcoming event for U.S. macroeconomic news is Friday's August employment report. Economists are predicting a rebound in job gains to 160,000 from July's weak 114,000, with the unemployment rate expected to decrease to 4.2% from 4.3%.