Wall St closes up after bruising month Donna Kardos Yesalavich From: Dow Jones Newswires September 01, 2010 7:00AM
US stocks have eked out a tiny advance, in the conclusion of a bruising month for the market.
The Dow Jones Industrial Average edged up 4.99 points, or 0.05 per cent, to 10,014.72, but tumbled 4.31 per cent on the month, marking its first August drop in five years.
August turned out to be the second-worst month of the year for the Dow Jones Industrial Average behind May, and the measure is now off 3.96 per cent for the year.
The Dow's technology components were the biggest weight on the Dow for August, with Hewlett-Packard dropping 16 per cent, Intel sliding 14 per cent and Cisco Systems declining 13 per cent in the month.
The swoon has come on a steady trail of disappointing economic data that have gotten investors increasingly worried about whether the economy could be headed toward a double dip.
"The economic data continue to weaken and peter down and really forced the market to readjust to a potentially lower growth environment," said Wasif Latif, vice-president of equity investments at USAA Investment Management.
"We're definitely slowing down, but we may not be double dipping. It's more of a case of an adjustment to a lower-than-previously-thought growth environment."
Still, with the Dow managing to edge up slightly in the latest session, its gainers were led by AT&T, which rose US40 cents, or 1.5 per cent, to $US27.03, while JP Morgan advanced US51c, or 1.4 per cent, to $US36.36, and Merck added US43c, or 1.2 per cent, to $US35.16.
The S&P 500 index rose 0.41 of a point, or 0.04 per cent, to 1049.33, with gains in its telecommunications and financial sectors offsetting declines across its health-care and technology categories. The S&P 500 dropped 4.74 per cent this month, with its financial sector hit the hardest over the period.
Just two S&P 500 sectors rose in August: telecommunications and utilities.
The Nasdaq Composite declined 5.94 points, or 0.28 per cent, to 2114.03, and it dropped 6.24 per cent for the month of August.
In the bond markets, US Treasury prices rose, erasing last week's losses, as the market benefited from month-end demand and lingering worries about the strength of the economic recovery.
While data calmed investors somewhat -- figures on US consumer confidence were better than expected and a report on manufacturing activity in the Chicago area wasn't as dire as some had feared -- investors were anticipating weak results from data later in the week, keeping interest in low-risk Treasuries alive.
Market participants will closely watch national readings on US manufacturing, the US services sector and US employment later this week for further clues into how the recovery is faring. Market participants expect the US lost more than 100,000 jobs again in August and the unemployment rate ticked up.
In general, "there continues to be a very big demand for Treasuries," said Brian Edmonds, head of interest rates at Cantor Fitzgerald in New York.
"The economic data overall have been poor, and the concerns about the economy are real."
Recently, overall weaker US data have fuelled fears that the economy could deteriorate in the second half, sending Treasury yields to record lows. The two-year yield hit a record low of 0.45 per cent last week, and the 10-year yield fell as low as 2.418 per cent, a level last hit in January 2009.
Meantime, month-end buying buoyed the market. At the end of a month, many hedge funds and mutual funds need to rebalance their portfolios to match changes in indexes to which they are benchmarked. In many cases, that means fund managers buy newly minted debt to replace debt that has matured or moved out of the benchmarks, helping Treasuries on the last day of the month.
In late New York trading, the two-year note was up 1/32 to yield 0.481 per cent, the 10-year was up 16/32 to yield 2.474 per cent and the 30-year was up 1 4/32, yielding 3.521 per cent.
Chris Bury, co-head of rates trading and sales at Jefferies & Co, said he believes the market is trying to define a range, of a 2.40 per cent to 2.55 per cent yield on the 10-year note.
