Now at 9,450, down 94 points.
NEW YORK (AP) — Investors were trading cautiously on the last
day of August following a big drop in Asian markets.
U.S. stock futures fell after China’s main index plunged 6.7
percent, adding to a nearly 3 percent drop on Friday. The selloff
in Chinese shares has been fed by concerns over a tightening in
bank lending that could hurt the country’s economy. That in turn
has weighed on markets around the globe this month.
Japan’s Nikkei stock average fell 0.4 percent after the country’s
opposition party came to power in a landslide victory. European
markets were also lower.
There is little economic news scheduled for Monday, but key
readings come later this week on manufacturing and employment in
August that have the ability to either sustain or upset the
market’s massive six-month rally.
After rising more than 45 percent from 12-year lows in March, the
Dow Jones industrial average stands less than 500 points away from
10,000. Investors have grown increasingly worried that the market
may have gotten too far ahead of the economy. Without evidence of
actual economic growth, analysts have warned that the market’s
rally could fizzle in the coming weeks, especially as traders head
into September, historically a rough month for the stock
market.
“There’s enough jitteriness to set the stage for a decline,” said
Hugh Johnson, chairman and chief investment officer of Johnson
Illington Advisors. “The economic numbers could neutralize the
nervousness, could put portfolio managers’ worries to rest.”
Ahead of the market’s open, Dow Jones industrial average futures
fell 61, or 0.6 percent, to 9,475. Standard & Poor’s 500 index
futures fell 6.80, or 0.7 percent, to 1,020.60, while Nasdaq 100
index futures fell 15, or 0.9 percent, to 1,627.50.
Bond prices were mixed. The yield on the benchmark 10-year Treasury
note, which moves opposite its price, rose to 3.46 percent from
3.45 percent late Friday.
The dollar was higher against other major currencies, while gold
prices fell.
Oil prices lost $1.67 to $71.07 a barrel in electronic trading on
the New York Mercantile Exchange.
Germany’s DAX index was down 0.8 percent, while France’s CAC-40 was
down 0.7 percent in afternoon trading. The London Stock Exchange
was closed for a public holiday.
In corporate news, oilfield services company Baker Hughes Inc. said
it will buy BJ Services Co. in a cash-and-stock deal valued at $5.5
billion.
BJ Services shares shot up more than 11 percent in premarket
trading, adding $1.74 to $17.17. Baker Hughes shares fell $1.34, or
3.5 percent, to $36.75.
Stocks are on track to have their best August since 2000, with the
Dow and the S&P 500 up just over 4 percent for the month as of
Friday. Most of the gains were made earlier this month as investors
cheered improvements in consumer confidence and an upbeat
assessment of the economy from Federal Reserve Chairman Ben
Bernanke.
Last week, the major indexes all rose less than 0.5 percent amid
light trading and little news.
Trading is expected to be relatively light this week as well, with
many traders taking vacations. Light volume can skew the market’s
movements. Still, there are a number of important readings on the
economy that could sway the market one way or the other.
On Tuesday, the Institute for Supply Management will issue its
assessment of the manufacturing industry during August. Economists
are expecting ISM’s manufacturing index to come in at 50.1, up from
48.9 in July. A reading above 50 would indicate growth in
manufacturing, something that hasn’t happened since January
2008.
The most important piece of data this week is the government’s
monthly jobs report on Friday. Economists are expecting another
220,000 jobs were lost, down from 247,000 in July. Last month’s
report showed an unexpected dip in the unemployment rate and
investors are anxious to see if the rate continues to fall.
As unemployment spiked this year, Americans who lost their jobs or
were worried about their job security dramatically cut back on
their spending. If fewer jobs are being lost, consumers might start
to feel comfortable spending again and help get the economy back on
its feet.
August sales reports from major retailers this week will provide
the latest insight into consumer spending.
