😔 Bad economy data

and stocks tumble

Good morning investors! September is the worst month for stocks on average, hence it shouldn’t come as a surprise that it started on a bad note.

Today we cover:

  • US economy news

  • Stocks had a horrible day

  • Boeing hit a new 52-week low

📊 Economy and News 

US construction spending comes lower than expected

U.S. construction spending declined more than anticipated in July, as rising mortgage rates and an oversupply of homes put pressure on single-family home construction.

The Commerce Department's Census Bureau reported on Tuesday that construction spending fell by 0.3% in July, following a flat performance in June. Economists surveyed by Reuters had predicted a smaller decline of 0.1%. Compared to the previous year, construction spending in July was up by 6.7%.

Private construction spending decreased by 0.4% in July, with residential construction investment also down by 0.4%.

Spending on new single-family home projects saw a sharp drop of 1.9%, while spending on multi-family housing remained unchanged. The increase in mortgage rates during the spring negatively affected homebuilding and sales, leading to an inventory buildup in certain areas.

The surplus of available homes and reduced demand have led builders to delay starting new projects. Single-family home construction fell to its lowest point in 16 months in July, with inventory levels approaching those seen in early 2008.

Residential investment, which encompasses homebuilding, declined in the second quarter after experiencing strong double-digit growth in the first quarter of the year. Mortgage rates have since declined to 16-month lows amid expectations that the Federal Reserve will begin lowering interest rates this month.

Spending on private non-residential structures, such as factories, dropped by 0.4% as the momentum from President Joe Biden's initiative to boost semiconductor manufacturing in the U.S. waned.

Meanwhile, investment in public construction projects increased slightly by 0.1%. State and local government spending fell by 0.1%, while federal government project spending surged by 2.1%.

Global hits:

Global markets fall:

Also check: A gauge of U.S. manufacturing edged up last month from an eight-month low in July amid some improvement in employment, but the overall trend continued to point to subdued factory activity.

📈 Stocks

S&P 500 5,528.93 (-2.12%)
DJIA 40,936.93 (-1.51%)
NASDAQ 17,136.30 (-3.26%)
BRENT CRUDE 73.69 (-0.09%)
* Prices as of Sep 4th, 12:20 AM UTC

Stocks had a bad day

Stocks plunged on Tuesday as technology companies struggled, and fresh economic data reignited concerns about the economy's health.

Semiconductor stocks dragged the market down significantly, with Nvidia leading the decline, plummeting over -9%. The selloff came ahead of reports after the closing bell that Nvidia has been subpoenaed by the U.S. Justice Department, seeking evidence that the chipmaker as well as others violated antitrust laws.

Intel dropped nearly 8%, Marvell sank -8.2%, and Broadcom fell about -6%. AMD declined -7.8%, and Qualcomm was down nearly -7%. The VanEck Semiconductor ETF (SMH), which tracks semiconductor stocks, tumbled -7.5%, marking its worst day since March 2020.

Nvidia’s sharp decline on Tuesday wiped out nearly $300 billion in market value, impacting the broader market. The stock has been falling since reporting earnings last week.

Over the past year, chip stocks have surged on optimism that the artificial intelligence boom would drive increased corporate spending. Despite Tuesday’s drop, Nvidia remains up 118% for the year.

Chip stocks, however, also have a lot on the plate. Intel made headlines by announcing new laptop processors capable of running AI programs directly on the device, eliminating the need for cloud-based servers. On the other hand, Salesforce is ready to acquire AI voice agent firm Tenyx, joining AI talent race.

Boeing falls below 52-week low: Boeing had a rough day, hitting a 52-week low of $159.65. The aerospace giant continues to face industry challenges and internal issues.

Boeing shares fell -8.3% in the morning session after Wells Fargo analyst Matthew Akers downgraded the stock from Equal Weight (Hold) to Underweight (Sell) and slashed the price target from $185 to $119. Moreover, a possible strike also affected the stock.

This new price target suggests a potential 25% drop from the stock's current trading level. The downgrade cited concerns about cash flow issues related to Boeing's efforts to produce new aircraft.

Elsewhere, Cathay Pacific inspections found 15 A350s need engine parts replaced showing airline stocks are still in trouble.

Also check: Airbnb asks NYC to reconsider regulations on short-term rentals.

Disappointing: Asana shares plummet -17% as guidance comes lower.

Correction: Tom Lee of Fundstrat Global Advisors, known as one of Wall Street's most optimistic voices, is predicting a 7-10% market pullback within the next two months. Despite this expected decline, he believes it will present a good buying opportunity and remains confident in his forecast for a '40% rally in small-cap stocks by the end of the year.'

💵 Personal Finance

Are you 'behind' on retirement savings? - Part I

About 56% of adults in the US aren't happy with retirement savings and about 37% are 'significantly behind' retirement goals.

Is this number surprising? Not to us because we know how hard it is to save in today’s environment. You need about a million to retire happily (in the US). The amount, however, depends on a variety of factors.

Here’s how you can know if you’re also ‘behind’ on your plan:

Use online tools

There are several online tools that can help you determine how much you need to save in order to retire peacefully. Some of our favorites are find on sites like Fidelity and T. Rowe. The platforms provide benchmarks for different age milestones and a target for how much to save.

We used both these tools and found this:

  • You should have twice your starting salary saved by the age of 35, according to Fidelity.

  • You should have 10x your starting salary saved by the age of 67, according to Fidelity.

  • You should have 1 to 1.5 times your current annual salary saved by age 35, according to T. Rowe.

  • You should have 7 to 13.5 times your current annual salary saved by age 65, according to T. Rowe.

Based on these figures, you can see how close you are to your goal.

Want to make it easier? Use our retirement calculator. Those who need more help can even try professionals. Also, don’t forget to check part II of this topic tomorrow.

💰 Be a Better Investor

"Education is the passport to the future, for tomorrow belongs to those who prepare for it today."

Malcolm X

Resources:

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.