September is widely regarded among equity and futures brokers and traders as the worst month for stocks – for whatever reason, equity indexes tend to slump once autumn sets in. That pattern probably isn’t helping the already jittery nerves of investors, as U.S. stock index futures dropped once again on August’s last day of trading.
The Dow Jones Industrial Average index futures lost 9 points to 9,970 – and the index’s opening below 10,000 could signal further losses of confidence ahead. S&P 500 futures dropped 0.8 points to 1,044.3, while Nasdaq 100 futures slipped 5.25 points to 1,763.
The month tried to get off to a better start, but relentlessly grim economic data depressed investor sentiment. A few big mergers – like BHP Billiton’s proposed acquisition of Potash and Intel’s purchase of McAfee and part of Infineon – failed to generate much enthusiasm in the broader markets.
Simply put, the economic fundamentals have failed to follow up on generally positive revenue and earnings reports for the second quarter. The one bright spot on Tuesday morning was a slight uptick in the Case-Shiller index of U.S. home prices – but that may not be enough to offset the effect of slumping sales, thanks to the expiration of a federal tax credit for new home buyers in April.
Meanwhile, consumer sentiment remains stagnant, and disposable personal income dropped in the last month, raising fears of a debt-deflation spiral.
“The past couple of weeks have been clouded by talk of a double-dip recession,” Ben Westmore, a minerals and energy economist at National Australia Bank in Melbourne, told Bloomberg News. “Until we get some macro news that is more consistent, these markets are going to be a bit choppy.”
The concern about developed markets is rebounding onto some of the key emerging markets which supply them with finished goods and raw materials.
Hong Kong’s Hang Seng index futures lost 351 points to 20,350, while Mexican Bolsa index futures slipped 25 points to 31,280. The MSCI Emerging Markets Index, a key measure of investor attitudes towards higher-risk, higher-return equity assets in the developing world, lost 1 percent to 936.07 points at 7:00 a.m. in New York, and emerging bonds also fell.
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