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President Bola Ahmed Tinubu will leave Abuja today, October 2, for the United Kingdom to kick off a two-week vacation as part of his annual leave.

Presidential spokesperson Bayo Onanuga in a statement said he will use the two weeks as a working vacation, and a retreat to reflect on his administration’s economic reforms.

He will return to the country after the leave expires.

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It was déja vu on Wall Street Tuesday as stocks slumped at the start of a new month for the third consecutive time, as market participants assessed the escalation of conflict in the Middle East and the possible fallout of U.S. port strikes.

The S&P 500, which closed at a record high on Monday to wrap up a strong third quarter, fell 0.9% on Tuesday, while the tech-heavy Nasdaq Composite ended 1.5% lower.

Markets were rattled on Tuesday by a massive U.S. dockworker strike that threatens to throw a wrench in domestic supply chains and disrupt economic activity. Dockworkers at East Coast and Gulf Coast ports handling more than 68% of U.S. imports walked off the job Tuesday morning after the expiration of their contract with an industry group representing global shipping companies.

Stocks got another shock Tuesday afternoon when Iran launched a barrage of missiles at Israel, which came soon after Israel launched an incursion in Lebanon and following the killing last week of a Hezbollah leader. The escalations by Israel and Iran sent oil prices soaring more than 5% amid concerns that a deeper conflict could stem the flow of crude out of the Middle East, a major global supplier.

The CBOE Volatility Index (VIX) popped amid the tumult, jumping as much as 24%. Investors flocked to traditional safe havens like gold, which was up nearly 1% Tuesday afternoon, and Treasurys. 

Tuesday’s volatility resembled both September's and August's in certain ways. Early August’s selloff was sparked by worrisome jobs data and shifting global interest rates. Treasury yields and stocks declined this morning as markets digested data showing a continued hiring slowdown.

September’s early rout was led by tech stocks after chip giant Nvidia (NVDA) posted good but not perfect earnings, leading some investors to pull back from richly valued tech stocks. Tech led markets lower on Tuesday, with Nvidia off nearly 4%, and Apple (AAPL) and the PHLX Semiconductor Index (SOX) each down about 3%. 

Investors will be hoping Tuesday's slump is as short-lived as the last two. Stocks rebounded throughout both August and September to finish out each month at or near record highs.

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Lululemon (LULU) shares moved lower Tuesday as Morgan Stanley analysts said that the company's better-than-expected sales growth over the last several years will be challenged to increase at a similar pace.

The analysts, lowering their price target to $314 from $326, said consensus expectations that the company's China sales will see a compound annual growth rate (CAGR) of at least 20% in the coming years are likely too optimistic. Their price target is a bit below the roughly $316 mean of analysts tracked by Visible Alpha.

Lululemon shares fell more than 1% Tuesday afternoon, more than the S&P 500. The shares have lost nearly half their value since the start of the year.

Over the last several years, Lululemon has been "one of the few Western specialty retailers to successfully enter China" thanks to a "more thoughtful and localized entry approach vs. peers, and particularly relevant brand positioning" in the region, the analysts wrote.

But a worsening macroeconomic picture and the potential for Chinese consumers to gravitate to lower-cost and domestic brands could slow Lululemon's sales growth, they said.

The analysts said that using Lululemon's growth metrics in other markets, they see a likely projection of $2.3 billion in annual China sales by the end of 2028, compared with the $2.7 billion in annual sales that a low-20% CAGR would lead to.

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Data from the manufacturing sector showed little improvement in September as firms wait for the effect of interest rate cuts to take hold.

The Institute of Supply Management (ISM) manufacturing Purchasing Managers’ Index (PMI), a survey of economic trends, was 47.2% in September, the same result as the prior month. (A reading below 50 indicates a contraction.) Inflation and the high interest rates used to fight price pressures have been a burden for manufacturers.

At the end of September, the Federal Reserve cut rates for the first time in four years, lowering its influential federal funds rate by a half-percentage point. September's data was gathered before the cut, and economists said the survey showed that purchasing managers were waiting to see the effects of lower interest rates.

“Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy—which the U.S. Federal Reserve addressed by the time of this report,” said Timothy Fiore, chair of the ISM manufacturing business survey committee.

The manufacturing survey showed some positive signals, with production improving and prices paid to suppliers falling to their lowest reading of the year.  

At the same time, data showed a decline in employment, with only two of the 18 industries surveyed reporting growth. The data comes ahead of the Friday release of the September jobs report, the first since the Federal Reserve cut interest rates. Softness in the labor market helped push the Federal Reserve to cut the interest rate more than some economists expected. 

“The broad jobs data are still consistent with a stalling in hiring rather than widespread layoffs,” Wells Fargo wrote. 

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Cerebras Systems, an artificial intelligence (AI) chipmaker looking to compete with the biggest tech firms in the industry like Nvidia (NVDA), filed for an initial public offering (IPO) Monday, with the goal of listing on the Nasdaq under the "CBRS" stock ticker.

The company, founded in 2016, has spent the last several years designing chips specifically for AI technology. In its prospectus filed Monday, Cerebras said it has worked to answer the question of how it would design chips if it were starting the design process from scratch.

The company says that its design process has led it to create a chip substantially larger than those created by competitors, to avoid the complex process of connecting them and to provide greater on-chip memory and bandwidth.

In its prospectus, Cerebras reported a $66.6 million net loss for the first six months of 2024 on $136.4 million in total revenue, compared with a wider $77.8 million net loss and $8.7 million in revenue in the first half of 2023, as it said associated costs rose substantially year-over-year with increased production.

It listed its competition as chipmakers including Nvidia, Advanced Micro Devices (AMD), and Intel (INTC), along with Big Tech giants Microsoft (MSFT) and Alphabet (GOOGL), which have begun designing and producing their own AI chips.

Cerebras didn't disclose how many shares it intends to offer, or what its IPO price will be, but clearly the potential IPO was announced at a time when companies are looking to capitalize on the market's enthusiasm for the AI industry.

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Crude oil gained as much as 5% as reports of Iranian missiles targeted at Israel came in Tuesday, in an escalation of tensions in the Middle East.

The news jolted crude oil futures, which had held fairly steady in the past week, dipping briefly yesterday on news of Libya resuming oil production.

Brent crude futures briefly crossed $75 per barrel while the U.S. benchmark, West Texas Intermediate Texas (WTI), traded just below $72 per barrel as oil supply disruptions concerns rose.

Iran is a member of OPEC—a trade bloc of oil producing nations—and was the world's ninth-largest oil producer in 2023.

Israel said Iran launched missiles towards it, in what is being construed as a direct attack. "A short while ago, missiles were launched from Iran towards the State of Israel,” the Israel Defense Forces said in a statement, reported.

Tensions in the middle east have been rising over the past few days after Israel launched strikes against Iran-backed Hezbollah leaders in Lebanon, likely prompting today's action.

"The deeper the conflict intensifies, oil could indeed surge higher as risk rises that the military response veers into the oil producing area around Iran," said LPL Financial Chief Global Strategist Quincy Krosby in a commentary.

The gains for both Brent and WTI moderated to about 2.5% in mid-afternoon U.S. trading. Despite the sharp increases Tuesday, Brent is still about 20% below its high for the year of more than $90 a barrel.

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