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Stocks end strong month with a bout of selling

Investor worries about the economy send the Dow down almost 48 points. Now comes September, historically the worst month for stock markets.

September 01, 2009|Associated Press

NEW YORK — After giving the stock market a big gain during August, investors still worried about the economy backtracked on the last day of the month.

Stocks fell in light trading Monday after a 6.7% plunge in China's main stock market unleashed a wave of selling around the world and added to concerns that stocks had rocketed too high, too fast since hitting 12-year lows in March.

The Standard & Poor's 500 index rose 3.4% in August for its sixth straight monthly gain. It is up 51% since early March, the best six-month run since 1938.

On Monday, U.S. stocks fell along with other world markets after shares in Shanghai slid on continued uneasiness about China's economy.

The Shanghai market is down more than 20% from its peak in early August, putting it in bear market territory.

On Wall Street, September -- the worst month on average for the stock market over the last 80 years -- begins today with an expected report on manufacturing that, along with job data due Friday, could upend the market's 6-month-old rally or help push it forward.

The drop in stocks Monday was broad, with all but one of the 10 major industry groups in the Standard & Poor's 500 index falling. Energy and material stocks posted some of the biggest losses as prices for commodities including crude oil and copper slid on concerns that demand from China would fall.

The Dow fell 47.92 points, or 0.5%, to 9,496.28. The S&P 500 index slid 8.31 points, or 0.8%, to 1,020.62, while the Nasdaq composite dropped 19.71 points, or 1%, to 2,009.06.

The Russell 2,000 index of smaller companies lost 1.3%.

Three stocks fell for every one that rose on the New York Stock Exchange, where volume was light.

Japan's Nikkei stock average fell 0.4% after the country's opposition party ascended to power in a landslide election victory. Key stock indexes fell 1% in Germany and 1.1% in France. The London market was closed for a holiday.

The retreat in U.S. stocks shaved some gains from the market's best August since 2000. For the month, the Dow rose 3.5% and the Nasdaq composite index rose 1.5%.

Since its low in March, the Dow is up 45% and the Nasdaq is up 58%.

Oil futures tumbled $2.78 to settle at $69.96 a barrel on the New York Mercantile Exchange.

Copper fell 4.2%. Gold also fell as the dollar was mixed against other major currencies.

Demand for the safety of government debt rose, pushing down yields while underscoring investors' uneasiness. The yield on the benchmark 10-year Treasury note fell to 3.4% from 3.45% late Friday.

Shares of commodity producers fell. Aluminum maker Alcoa slumped 3.6%. Freeport-McMoRan Copper & Gold slid 3.8%.

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