- Commentary -

September 1, 2009 (FinancialWire) (By Philip Holmes) — U.S. stocks ended lower on Monday after a big selloff on China’s main index triggered concerns that global recovery might hit a few speed bumps. Hardest hit were energy and bank stocks such as Chevron (NYSE: CVX) and American International Group (NYSE: AIG).

The Dow Jones industrial average lost 47.92 points on the trading day, to close at 9,496.28. The Standard & Poor’s 500-stock index shed 8.31 points, to close at 1,020.62, while the Nasdaq composite index tumbled 19.71 points, for a 2,009.06 finish.

Chinese investors led the selloff, drop-kicking the Shanghai Composite Index by 6.7%. Chinese banks, which have been lending furiously as part of a concerted stimulus effort, have recently signaled a pullback. Investors fear that new, tighter lending policies will strangle the Chinese economy, which of course would hamper recovery elsewhere in the world.

Global rumblings scare U.S. investors despite a steady, recent stream of rosy reports signaling a possible end to recession. The news continued on Monday, with the Chicago Fed releasing its manufacturing index report for August. It was the third consecutive monthly gain for the index, which has risen to the magic 50.0 mark, signaling a return to “normal” levels of confidence among Midwest regional manufacturers.

But profit taking and caution may be the hallmark traits of September’s investors, according to BusinessWeek’s Ben Steverman. He cites historical precedent: both the beginnings of 1929 stock market crash and last year’s fall of Lehman Brothers, (now considered the beginning of the fall), occurred in September. “Even worse, the index plunged 30.7% in September 1931,” Steverman points out.

September is also traditionally the worst month of the year for the S&P 500. Some fear that the rapid (many say irrational) rise in U.S. equities over the summer may end in a big selloff once decision-makers return from summer vacations. September’s bad vibe on steroids, in other words.

Others are dismissive of the fears, and look for a shallow selloff at worst. We’ll see. There are troubling signs at the banks, for instance. One can’t be comforted by the FDIC’s latest statements, which include pleas to the private equity market for assistance in dealing with an expected high number of bank failures.

FirstAlert(tm) “Money Index” is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ/AMEX 25 Most Actives and NYSE/NASDAQ/AMEX greatest Percentage Losers and Percentage Winners (weighted against pure monetary loss/gain) indicate the direction in which the mass of money is flowing, as well as the general focus of the market. Of the Most Actives, last session’s trading showed 6 advancers versus 19 decliners. Volume leaders were led by Citigroup, Inc. (NYSE: C) trading 122,762,600 shares closing at $5.00 (down 4.4%), E-Trade Financial Corp. (NASDAQ: ETFC) trading 53,097,983 shares closing at $1.76 (up 7.3%) and the SPDRS Trust Series 1 ETF (AMEX: SPY) trading 47,468,999 shares closing at $102.46 (down 0.9%). Of last session’s Greatest Percentage Losers, stocks taking the greatest monetary losses were led by Barclays PLC (NYSE: TC) trading on volume of 19,300 shares (losing $12,187.4 million), American International Group, Inc. (NYSE: AIG) trading on volume of 9,989,800 shares (losing $658.8 million) and Standard Pacific Corp. (NYSE: SPF) trading on volume of 1,286,100 shares (losing $34.3 million). Of last session’s Greatest Percentage Winners, stocks making the greatest monetary gains were led by Helicos BioSciences Corporation (NASDAQ: HLCS) trading on volume of 3,316,802 shares (gaining $67.9 million), Sequenom Inc. (NASDAQ: SQNM) trading on volume of 7,805,155 shares (gaining $67.9 million) and AuthenTec, Inc. (NASDAQ: AUTH) trading on volume of 960,825 shares (gaining $20.6 million). [Go to http://www.financialwire.net/?s=%22%27Money+Index%27+Synopsis for all the most recent FirstAlert(tm) "Money Index" Synopses.]

The FirstAlert(tm) Economics Calendar lists Weekly Chain Store Sales (8:55 a.m.), ISM Index for August (10 a.m.), Construction Spending for July (10 a.m.), Pending Home Sales for July (10 a.m.), Auto Sales for August.

The FirstAlert(tm) Events Calendar showcases CBST at FTN Financial Health Care Corporate Access Conference; FFIV Bus Tour with RBC Capital; MTW, ITT, HON, GE at Morgan Stanley Global Industrials Unplugged Conference; WRC, GES at Lazard Capital Markets MAGIC Retail & Apparel Conference.

FirstAlert(tm) Website of the Day: http://www.dol.gov/opa/aboutdol/laborday.htm

Quote of the Day: “If love is the answer, could you please rephrase the question?” Lily Tomlin

Today is: Independence Day in Uzbekistan, Emma Nut Day.

Happy Birthday: Edgar Rice Burroughs, Yvonne De Carlo, Rocky Marciano, Conway Twitty, Seiji Ozawa, Lily Tomlin, C. J. Cherryh, Barry Gibb, Dr. Phil, Gloria Estefan, Tim Hardaway.

Today in History: Lady Anne Boleyn was created Marchioness of Pembroke in 1532 by her fiancée, King Henry VIII of England. King Louis XIV of France died in 1715 after a reign of 72 years, the longest of any major European monarch. The Liberty Bell arrived in Philadelphia in 1752. Juno, one of the largest main belt asteroids, was discovered in 1804 by German astronomer Karl Ludwig Harding. Former US Vice President Aaron Burr was acquitted in 1807 of treason. Paul “Bear” Bryant opened his infamous 10-day football mini-camp in Junction, Texas, in 1954. In Reykjavík, Iceland, in 1972, American Bobby Fischer beat Russian Boris Spassky and became the world chess champion.

[FirstAlert(tm) was created by Gayle Essary, founder of Investrend Communications, Inc., parent of Investrend Information. The opinions expressed in FirstAlert(tm) do not necessarily reflect the opinions of Investrend.]

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