Morning Bid: Stocks in seasonal sneeze as factories flunk

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Global Markets News

Mike Dolan,Global Manufacturing,Institute For Supply Management

Given that September historically tends to be the worst month of the year for stock market returns - with August a close second - then seasonal flurries like...

Wall Street seems to be making a habit of these early month stock plunges, with Tuesday's tremor a mild aftershock from the brief August quake one month ago.

U.S. output contracted again in August, according to Tuesday's release of the Institute for Supply Management's latest factory survey, even if some modest improvement in employment readings may ease fears for this week's big labor market readouts. The first of those starts today with a report on July job openings.

While manufacturing only accounts for about 10% of the U.S. economy, it's 15% of euro zone GDP, 20% of Germany's output and 26% of China's.More dominant service sector readings are offsetting the gloom - with euro zone surveys on Wednesday showing the overall business activity signal still expanding last month and only marginally below forecast as the Paris Olympics seemed to lift the mood.

Stocks around the world were caught in the slipstream on Wednesday, with Japanese, Taiwanese and Korean markets all suffering 3-4% swoons.With growth clouds nudging up Federal Reserve easing expectations, there was some relief for global investors from the rally in Treasuries - sustaining the newly negative correlation between stocks and bonds that re-emerged last month.

U.S. crude prices fell below $70 per barrel for the first time since Jan. 2 and year-on-year price drops are now running at close to 20%. * US July job openings, July international trade balance, July factory goods orders; Canada July trade balance,

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