US Stocks slumped Friday, but managed to cut steeper losses by the close, after a weaker-than-expected consumer sentiment report raised worries about the strength of any economic recovery.
The fear on Wall Street is that nervous consumers are going to short-circuit the economic recovery.
The Dow Jones industrial average (INDU) lost 77 points, or 0.8%. The S&P 500 (SPX) index fell 8 points, or 0.9%. The Nasdaq composite (COMP) lost 24 points, or 1.2%.
US stock market outlook
"We've had a great run here, but here's five reasons to be concerned going into the fall," said Art Hogan, chief market strategist, Jefferies & Co.:
• September is historically the worst month of the year.
• The market has had a significant run up from its March 9 lows, up about 50%. "On valuation alone we may be getting ahead of ourselves," said Hogan.
• Insider selling. "The significant increase in insider selling activity suggests that in the eyes of corporate management valuations are becoming stretched at current levels," the analyst said.
• Short interest is winding down. "The lack of meaningful short positions for the most economically sensitive sectors eliminates a source of market support that was significant during the most recent rally," said Hogan.
• The consumer in general. "Unemployment is rising, the value of consumers' home continues to be languishing, and the consumer seems to have become a saver. The de-leveraging of the U.S. consumer is going to be a long process," said Hogan.
LONDON - European stock markets fell on Friday after fresh data showed the eurozone was entering deflationary territory and a weak report on US consumer sentiment triggered renewed caution among traders.
London's benchmark FTSE 100 index closed down 41.49 points, or 0.87 per cent, at 4,713.97.
FRANKFURT - The Dax dropped 92 points, or 1.70 per cent, to 5309.11.
PARIS - The CAC 40 gained 29.12 points, or 0.83 per cent, to 3,495.27.
TOKYO - Japanese shares ended at a new 10-month high on Friday, mirroring gains on overseas markets, as rebounds in the German and French economies lifted hopes of a global recovery.
The benchmark Nikkei-225 index rose 80.14 points, or 0.76 per cent, to 10,597.33, the best finish since October 3. HONG KONG - Hong Kong shares rose 0.15 per cent on Friday as dealers followed other regional gains on the back of strong economic news out of Europe.
Oil, which has been propped up by optimism that people will begin spending more, tumbled after a week-ending report suggested those hopes may be premature.
Benchmark crude for September delivery lost $US3.01 to settle at $US67.51 a barrel on the New York Mercantile Exchange.
Natural gas prices fell to its lowest level this year. The contract for September delivery dropped 9.8 cents to settle at $US3.238 per 1,000 cubic feet.
Newedge analyst Antoine Halff said oil prices are headed for an extended fall later this year or early next year if the economy doesn't show a bolder move toward recovery. "There's greenshoots all over the place, but consumer confidence isn't following," Halff said.
The Australian share market is expected to open lower after a fall on Wall Street on Friday and weaker commodity prices.
In Australia, no major economic data is released. Ansell, Transfield, NIB Holdings and BlueScope release earnings results.
In the US, the Empire State survey is released together with capital flows data.
Gold down $7.8 to US$948.70 an ounce Silver down 26.6c to US$14.722 an ounce Copper down 7.8c at US$2.68 a pound
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One of the Common Mistakes Made by Investors (Buying a stock when it’s trending down in price. Stocks are usually down in price for a reason)
