Stocks Close Down After First Week of Trading in September

September 10th, 2009

The Stocks were off to a poor start in first trading week of September, which is historically the worst month of the year for investors. The S&P 500 closed down a half-percent since the first of the month and is down roughly two percent from the August high. 

According to Chief Economist David Rosenberg of Gluskin-Sheff, “The historical record shows that equities go down in September or October by 10 percent or more fully 15 percent of the time.” 

Optimism among investors has been growing in recent months on the back of less-bad economic data. 

Meanwhile, the S&P 500 rose more than 50 percent from the 666.67 bottom forged on Mar. 6, 2009. Foreign markets are down, as well, with the Shanghai Composite in Asia down more than 20 percent from its August high.  

Private-sector jobs in the U.S. fell by 298,000 in August, greater than the 213,000 drop projected by economists. The jobless rate jumped higher than expected to 9.7 percent, up from 9.4 percent in July, according to Labor Department data released on Sept. 4, which is the highest level since June of 1983. The all-inclusive U-6 jobless rate rose to an all-time high of 16.8 percent in August, from 16.3 percent in July.  

It seems as though cash-strapped consumers continue to tighten their belts given the weak employment market, with Redbook reporting that chain store sales were down 0.6 percent in August and down 5.1 percent year-over-year. Retailers are now offering deep discounts to lure customers after a lackluster back-to-school shopping season, with Retail Metrics estimating that teen retailers feared the worst in August.

Those consumers still able to afford luxuries are benefiting from a weak retail market, with many retailers offering large discounts and price roll-backs.  

Many remain optimistic that the U.S. economy is improving. According to the Wall Street Journal,  J.P. Morgan economist Bruce Kasman suggesting that, “We had been looking for improvement, but the speed at which it’s come and the magnitude with which it has come is surprising.”  

According to the L.A. Times, President Obama suggested that the recent uptick in manufacturing data in the U.S. and abroad is proof that “the steps we’ve taken to bring our economy back from the brink are working.”  

The increase is partly due to the recently expired “Cash-for-Clunkers” program, which led to 690,114 new sales at a cost of $2.88 billion to the taxpayer.  Consumers were given credits of up to $4,500 for select models.