Trading kicks off worst month for stocks on manufacturing, construction data
Stocks gained 1.98 percent in August and about 10 percent for the summer to cap off a strong several months we have heard called “the 10 percent rally.” Equities overcame oscillating economic data and concern over European debt and the fiscal cliff for a generally positive trend.
Now comes September. Historically, September has been the worst months for stocks. Since 1929, the Dow averages a 1.4 percent decline in September and the S&P 500 comes in at a 1.3 percent drop. The linked article includes myriad theories as to why this could be, including the belief that September and October herald the yearly “cross roads” for the economy and that it could be a correction for exuberance over summer data.
Stocks have kicked off the month falling in line with its historical doldrums. The Dow has fallen over 80 points to begin the trading day and is hovering just over 13,000.
US manufacturing contracted at its sharpest level in three years in August. The Institute for Supply Management’s index for manufacturing fell to 49.6 percent. Any reading below 50 represents contraction while anything above represents expansion.
Construction spending fell 0.9 percent in July. The annual rate of $834.4 billion is the lowest pace since April.
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