Market Wrap | US Manufacturing Slows as Fed Independence Debate Heats Up

On September 2, 2025, U.S. manufacturing activity showed signs of slowing, as the August S&P Global Manufacturing PMI final reading was 53, below expectations. Additionally, macroeconomic pressures are evident as many economists advocate for the independence of the Federal Reserve amidst political tensions, emphasizing the potential for future interest rate cuts. These factors contributed to the declining performance of the major U.S. indices, with the S&P 500 falling 0.69%, the Dow Jones Industrial Average dropping 0.55%, and the Nasdaq Composite declining 0.82%.

In today's market, several sectors underperformed the S&P 500, including the technology, discretionary consumer goods, materials, industrial, real estate, and financial sectors. Conversely, the healthcare and energy sectors bucked the trend and saw gains.

Investors are increasingly optimistic about the Chinese stock market, with U.S.-traded Chinese ETFs attracting significant inflows for the third consecutive week, while other emerging market ETFs without China saw outflows. The U.S. August S&P Global Manufacturing PMI final reading was 53, slightly below expectations, indicating slower manufacturing activity. Meanwhile, economists are voicing concerns over the independence of the Federal Reserve amid political pressure, potentially influencing market expectations of interest rate changes. Additionally, Tesla's August wholesale sales in China reached 83,192 units, showing substantial month-on-month growth, reflecting robust demand in the electric vehicle market.