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NEW YORK (MarketWatch) -- U.S. stocks ended lower Thursday after a Federal Reserve official hinted at further interest rate hikes in a market worried that a string of seventeen rate increases over more than two years has already brought about a sharper-than-expected slowdown in economic growth.

The Dow Jones Industrial Average fell 74.76 points to 11,331. Of the 30 Dow stocks, 22 contributed to losses.

The Nasdaq Composite Index was down 12.55 points to 2,155.29. The S&P 500 Index dropped 6.24 points to 1,294.02.

"Janet Yellen, who tends to be a bit on the dovish side, was slightly hawkish and the market which had been lifting started to pull back on her comments," said Al Goldman, chief market strategist at AG Edwards, referring to remarks made by the president of the San Francisco Federal Reserve.

In a speech to a business group in Boise, Idaho, Yellen said the Fed's benchmark overnight lending rate is at an appropriate level, although the risks remain that the central bank will have to hike rates further to combat inflation.

"The bottom line is this. With inflation too high, policy must have a bias toward further firming," Yellen said. See full story.

However, for Goldman, the "big question started yesterday with data showing unit labor costs rising much faster than earlier reports had indicated."

Stocks ended lower Wednesday on that report as investors worried the rise in labor costs would prompt the Fed to resume lifting interest rates in a bid to choke off inflation. Wage inflation is an element of the economy the Fed watches closely.

Last August, the central bank decided to stop raising short-term interest rates to allow previous rate hikes to filter through into the economy. Prior to this pause, the Fed had lifted rates seventeen times in a row as it strove to reduce inflationary pressures by slowing economic growth. The fed-funds rate now stands at 5.25%

The central bank, says Goldman, has to decide whether "to step on the brakes now to try to get inflation toward their comfort zone," or "wait and let the slowdown in the economy do it naturally.

Nobody knows that answer, not even the Fed."

The latest data fueled worries about the extent of the slowdown in the economy.

 

Dow now down 50 points

 

Stocks fell for a second straight session as concerns about inflation and an overall economic slowdown continued to weigh on investors.



Wall Street, already armed with recent economic data pointing to a housing slowdown, was forced to digest sour anecdotal evidence as well. Beazer Homes USA Inc., Hovnanian Enterprises Inc. and KB Home warned that the home-building sector is facing difficulties including cancellations and spikes in inventories. Lowered sales expectations from ATI Technologies and Palm are combining to give sellers more motivation to keep locking in recent gains.

 

US markets down ... *SIGH!

 

LONDON (MarketWatch) -- U.S. stock market futures were pointing Thursday to another session of losses, with concerns over inflationary pressure at the same time of slowing economic growth still haunting markets.

S&P 500 futures declined 5.00 points to 1,297.70 and Nasdaq 100 futures lost 5.00 points to 1,570.75. Dow industrials futures shed 42 points to 11,373.

The Nasdaq Composite logged on Wednesday its largest one-day point drop in more than a month after statistics suggested both a spike in labor costs and slowing growth in some of the nation's regions. See Market Snapshot.

The Nasdaq dropped 37.8 points, while the Dow industrials slipped 63 points and the S&P 500 dropped nearly 13 points.

On the data front, the U.S. Labor Department said new filings for state unemployment benefits fell 9,000 during the latest week to 310,000, the lowest figure in six weeks. Meanwhile, the number of people collecting state unemployment benefits over the past four weeks rose to the highest level since February.

Weekly jobless claims and wholesale inventories highlight a relatively light day for U.S. economic data on Thursday.

The U.S. dollar was mixed, as it rose 0.7% against the euro to $1.2729 but fell 0.3% vs. the Japanese yen to 116.30. The euro-yen cross fell 0.9% to a 3-week low of 148.04.

Crude-oil futures edged up 10 cents to $67.60 a barrel after recent declines. Weekly energy inventory data is due later.

 

US futures pointed to a lower opening earlier ... but with this freshly-announced jobless data below, the mood will swing up today! Shiok???

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Wall Street closed sharply lower Wednesday after a series of economic reports left investors questioning whether the Federal Reserve might resume its string of interest rate hikes when it meets later this month.



A Labor Department report that wages rose at an annual rate of 4.9% in the second quarter, above the 4.2% the agency estimated, was an unpleasant surprise for a market that had reached three-month highs on hopes of stable rates. This leaves the yoy increase at 5% - the largest rise since 1990. For the first quarter, the department said labor costs jumped 9% - the largest quarterly rise in almost six years.



The market also found little solace in a report from the Institute for Supply Management that showed the services sector grew at a faster pace in August than economists forecast (57.0 in August, consensus 55.0). An economy still showing this type of growth could make it easier for the Fed to justify a rate hike to fight inflation. The central bank left rates unchanged at its last meeting after a string of 17 straight increases; its next meeting is Sept. 20.



Stocks drifted even lower Wednesday afternoon after release of the Fed's "beige book," which found that while economic growth continued in the fall, five of the Fed's 12 districts showed deceleration. The findings that the housing market slowed could also bolster the arguments of some that the economy at large could eventually suffer if consumer spending cools as a result.



One of the market's greatest fears is that although the economy might continue to slow, the Fed will resume its course of rate hikes as it seeks above all to forestall inflation. Both pose a threat to corporate profits.

 

NEW YORK (MarketWatch) -- U.S. stocks fell Wednesday on concern the Federal Reserve might interpret a report showing a bigger-than-expected rise in labor costs as a signal it may need to raise interest rates further to choke off inflationary pressures in the economy.

 

Below data in S'pore time .... US investors will look to these data results to sway the market.

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Economic data reporting later:

10pm - ISM services
2am - Fed beige book



Economic data for tomorrow:

8.30pm - Jobless claims
10pm - Wholesale inventories
10.30pm - Energy Dept. oil stocks
4.30am - Money supply (M2)



Economic data for Friday:

3am - Consumer credit

 

Dow down 39 points while Nasdaq down 19 points now - due to higher labor cost data reported before market opened.

 

NEW YORK (MarketWatch) -- U.S. stocks ended higher Tuesday, helped by strength in the technology sector, with Caterpillar Inc. another notable gainer after the heavy equipment maker said it would be raising its prices in 2007.

The Dow Jones Industrial Average rose 5.13 points to 11,469.28. Of the 30 Dow stocks, 14 contributed to gains.

The Nasdaq Composite Index rose 12.54 points to 2,205.70 while the S&P 500 Index edged up 2.24 points to 1,313.25

On Friday, the major averages closed at three-month highs following news that wage inflation was tamer than expected.

"Everybody at the end of last week always talks about people coming back from a long holiday but historically the week after the Labor Day weekend is almost as slow as the last week in August," said Jay Suskind, director of trading at Ryan Beck & Co.

"It's going to take a couple of days for people to get back to work."

Tuesday's gains confirm a historical trend. The Dow industrials have ended higher on the day after Labor Day nine out of the last eleven sessions,

according to the Stock Trader's Almanac.

Some analysts, however, are concerned that September frequently is a weak month for the stock market. See Irwin Kellner column.

On the broader market for equities, advancers outpaced decliners by 18 to 13 on the New York Stock Exchange, and by 18 to 11 on the Nasdaq.

Volume was light with 1.34 billion shares exchanging hands on the Big Board, while 1.75 billion shares were traded on the Nasdaq.

 

Think lower oil price will come into play later in the day to boost US markets.Dow being see-sawing up and down since opening, while Nasdaq flat. Today's volume is still low ....

 

US markets opened flat .... waiting game now.

 

LONDON (MarketWatch) -- U.S. stock market futures erased earlier losses to turn slightly higher Tuesday, following a three-day break, with renewed weakness in crude-oil futures helping provide a boost to market sentiment.

 

S&P 500 futures gained 1.40 points to 1,314.00 and Nasdaq 100 futures added 3.50 points to 1,594.00. Dow industrial futures rose 6 points to 11,478.

 

HEMPSTEAD, N.Y. (MarketWatch) -- Try to remember the kind of September when stocks were strong and investors mellow.

You'll need a good memory.

That's because it's been eight years since the stock market last enjoyed a decent September. Back in 1998 the Dow Jones Industrial Average last rose by 4% from the end of August to the end of September.

Since then, September has lived up to its reputation as the worst month of the year for equities. The Dow subsequently fell in September for six straight years (1999-2004) before rising fractionally last year. That six-year drop matches the skein that occurred between 1977 and 1982. It's only one shy of the record of seven down Septembers in a row set from 1928 to 1934.

Of course, not every September is a downer. But over the past 100 years, equities have retreated in six out of every 10 Septembers. That's 50% more declines than the second worst month, which is, you guessed it, October.

What's more, over the past century, the average change in the Dow during the month of September is a loss of 1.2%. This might not seem like much in and of itself -- until you see that this is 12 times larger than October's average decline.

To add insult to injury, the more recent the time period, the worse September looks. Over the past 16 years, September's average decline has been 4.7%; since 2001, the average drop swells to 6.4%!

What happens in August tends to influence September. Over the past 100 years, two-thirds of the down Septembers followed a rise in August. Guess what? Stocks rose by almost 2% last month.

Although the stock market crashes of 1929 and 1987 both occurred in October, it is September that holds the record for the biggest monthly decline. That took place in 1931, when the Dow ended up the month a whopping 31% lower than when it started.

Now before you accuse me of taking away the punch bowl just as the party is getting exciting, let me remind you that I don't make the rules -- I just play the game. And the game, my friends, calls for caution over these next two months.

Why the falloff in the fall? Your guess is as good as mine. Maybe it's the movement of the sun away from the Northern Hemisphere. More realistically, it could be nothing more mysterious than good old fashioned profit-taking, since most of the months prior to September tend to be up months for the market.

Speaking of profits, these sell-offs in September could also reflect a fear that many firms will not reach their earnings targets for the year. This month marks the beginning of corporate confessionals -- not just for the current quarter, but for the year as a whole.

Besides these burdens, stocks have additional uncertainties to contend with this year. There's the state of the economy and the weakening housing market, Federal Reserve policy, the mid-term elections, high energy costs and geopolitics.

These annual panic attacks could also represent something of a self-fulfilling prophecy. Because of September's notoriety, traders and investors naturally get nervous as August draws to a close, preferring to square their positions and wait until November rolls around.

After all, another equally well-known shibboleth down on Wall Street calls for traders to buy in November, sell in May and go away.

Dr. Irwin Kellner is chief economist for MarketWatch. He also is the Weller professor of economics at Hofstra University and chief economist for North Fork Bank.

 

Dun worry lah, Tanglinboy ....

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Coming Week: Back to Business

By Gregg Greenberg
TheStreet.com Staff Reporter
9/3/2006 9:50 AM EDT


It's back to business in the holiday-shortened coming week as traders return to face a traditionally rocky month for stocks.



'The vacation season is over, and the A-teamers will be coming back,' says Larry Wachtel, senior market analyst at Wachovia. 'And they better have their game faces on because September is the market's toughest month according to the Stock Trader's Almanac.'



In terms of trading patterns, Phil Roth, chief technical market analyst at Miller Tabak, says, 'September usually starts strong and ends weak, so the second half of the month is probably the more important test.' Roth's annual market model consistently has a low mapped in between September and mid-November, and he expects 2006 to follow that pattern.



September may be scary, but then again, August typically is as well. But that did not stop the indices from having a surprising late-summer rally. For the month of August, the Dow rose 1.8%, the S&P 500 added 2.2% and the Nasdaq jumped 4.5%.



Furthermore, some traders say the recent spate of benign economic data, as well as lower oil prices, are setting the table nicely for a fall rally.



'The faucet won't get turned on to full immediately, but the volume will gradually increase over the course of the next week,' says Larry Perruzi, equity trader at Boston Company Asset Management. 'And when it does, we could see stocks move higher because the news has generally been good.'

 

ok... ok.... I really cock up.... forgot its holiday over there.   :) 

 

tanglinboy,

Calm down...this is Fri close...no trading in NYSE today...

 

Wah! Dow up 83 points on open!