Quantcast
Get breaking news alerts via email

Click here to manage your alerts
In this Tuesday, Aug. 27, 2013 photo, trader Timothy Pastina, left, works on the floor of the New York Stock Exchange. Stock futures rose on an improving employment landscape and new figures released Thursday, Aug. 29, 2013, that show that U.S. economic growth has been stronger than was once thought. (AP Photo/Richard Drew)
After tough August, investors face scary September
First Published Aug 30 2013 04:35 pm • Last Updated Aug 30 2013 04:35 pm

New York • August was tough on the stock market. Now, investors face an even scarier September.

Disappointing news on consumer spending helped pull stocks lower Friday in a quiet end to the market’s worst month in more than a year.

Photos
Join the Discussion
Post a Comment

The Standard & Poor’s 500 index closed August with a loss of 3.1 percent while the Dow Jones industrial average lost 4.4 percent. Both had their biggest one-month drop since May 2012.

The month began on a high note. On Aug. 2, news that unemployment fell to its lowest level in more than four years helped lift the S&P 500 index to a record high of 1,709.67. Then things quickly changed.

Bond yields jumped, sending mortgage rates up, as investors began speculating that the Federal Reserve would withdraw some of its support for the economy as early as September.

An array of questions weighed on investors’ minds, said Lawrence Creatura, a money manager at Federated Investors.

The latest wild card is Syria. The possibility that the U.S. could strike Bashar al-Assad’s regime propelled oil prices to a two-year high earlier in the week.

"The Syria situation is a strong dose of uncertainty," Creatura said. "And investors hate uncertainty."

Before the market opened Friday, the government reported that Americans’ income and spending both increased just 0.1 percent in July. The scant rise suggested that economic growth was off to a weak start in the second half of the year. It followed other reports showing steep drops in new-home sales and orders for long-lasting manufactured goods in July.

The major indexes headed lower after the market opened Friday and never recovered. The S&P dropped 5.20 points, or 0.3 percent, to close at 1,632.97. Retail stores and other consumer-discretionary companies led eight of the index’s 10 industry groups to slight losses.


story continues below
story continues below

The Dow Jones industrial average fell 30.64 points, or 0.2 percent, to close at 14,810.31, and the Nasdaq composite dropped 30.43 points, or 0.8 percent, to 3,589.87.

Many investors say the recent slide is hardly a surprise after the stock market had such a strong run. The S&P 500 is still up 14.5 percent this year.

September could be even more difficult. Craig Johnson, a technical market strategist at Piper Jaffray, said he expects trading to turn increasingly turbulent. That’s because September is stacked with so many events that could shake investors’ confidence.

Germany holds national elections that could change how the eurozone handles rescue loans for troubled countries. The U.S. Congress will need to pass a spending bill to avoid a government shutdown. And many people expect the Fed to reduce its bond purchases, which have bolstered the economy and stock market.

"Most people I talk to have scaled back and are taking a more defensive posture," Johnson said. "They’re bracing for volatility."

Over the long run, September is also the stock market’s worst month. Since 1945, the S&P 500 index has slumped nearly six out of every 10 Septembers, with an average loss of 0.6 percent.

Salesforce.com jumped to an all-time high after the cloud-computing company reported strong quarterly results and raised its sales forecast late Thursday. Salesforce.com was up $5.48, or 13 percent, to $49.13, the biggest gain of any company in the S&P 500 index.

In the government bond market, the yield on the 10-year Treasury note edged up to 2.77 percent from 2.76 percent late Thursday.

Among other companies making moves Friday:

— General Electric reportedly plans to spin off its credit-card division through an initial public offering of stock. The IPO could come early next year, according to The Wall Street Journal. GE’s stock rose 3 cents, or 0.1 percent, to $23.14.

— Big Lots gained 78 cents, or 2 percent, to $35.42. Early Friday, the operator of discount-stores reported lower quarterly earnings and U.S. sales, but its overall results still topped the estimates of financial analysts.

— Krispy Kreme Doughnuts plunged 15 percent. Late Thursday, the company posted a drop in quarterly profits, which came in below analysts’ estimates. Krispy Kreme’s stock lost $3.51 to $19.72.



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Login to the Electronic Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.