Welcome to September: the most miserable month for stocks. Since 1929, the Dow has lost 1.3 per cent on average each September, and it's a similar story for the TSX.
No one really knows why for sure; some figure that it's because portfolio managers sell out of losing positions ahead of their year ends in October as they search for ways to keep the tax man at bay. Some also blame analysts, who have a habit of downsizing their annual estimates for companies this month now that first-half results are in.
As a seasonal indicator, it's been pretty reliable. And this September there are some other things to be fretting about. Technical indicators suggest the S&P 500 is overbought and vulnerable to a pullback. Meanwhile, equities have a history of moving lower in the run-up to a presidential race, especially a tight one like the one we've got going on now that creates an extra dose of uncertainty.
Today, look for a relatively flat start to the trading day as markets await the European Central Bank's meeting on Thursday, where it may reveal a debt-purchasing scheme, and the U.S. jobs report on Friday. U.S. futures are largely unchanged this morning and European and Asian markets slightly negative. In overnight news, Moody's placed the European Union's triple-A rating on negative watch, which contributed to the downward pressure.
For more on the week ahead, check out Michael Babad's top business stories.
Now, here's what you need to know as the investing day gets underway.
MARKETS:
Equities:
Futures: Dow 0.0 per cent, S&P 500 -0.1 per cent, Nasdaq 0.0 per cent
Hong Kong's Hang Seng index -0.6 per cent
Shanghai Shenzhen CSI 300 -0.6 per cent
Japan's Nikkei -0.1 per cent
London's FTSE 100 -0.5 per cent
France's CAC 40 -0.7 per cent
Germany's DAX index -0.4 per cent
Commodities:
WTI (Nymex Oct) +0.6 per cent at $97.09 (U.S.) a barrel
Gold (Comex Dec) +0.3 per cent at $1,692.20 $1,590.10 (U.S.) an ounce
Copper (Comex Dec) +0.6 per cent at $3.48 (U.S.) a pound
Currencies:
Canadian dollar up 0.0002 at 1.0143 per U.S.
STOCKS AND ECONOMIC INDICATORS TO WATCH:
Valeant Pharmaceuticals International Inc. shares are up 7.2 per cent in U.S. pre-market trading after announcing Monday it is buying U.S.-based Medicis Pharmaceutical Corp. for $2.6-billion (U.S.)
Facebook shares stumbled 5.4 per cent to an all-time low of $18.06 (U.S.) on Friday as two analysts from firms that underwrote its initial public offering cut their price targets on the shares. That puts the shares about 53 per cent below their initial public offering price of $38. There could be further weakness today; In premarket trading, they're down 0.6 per cent.
Earnings out today include Campbell Soup Co. and Smithfield Foods Inc.
(10 a.m. ET) The U.S. Institute for Supply Management issues its manufacturing index for August. Economists expect a reading of 50.0, according to Bloomberg, which would be better than July's reading of 49.8.
(Throughout the day) U.S. and Canada motor vehicle sales for August. A small improvement from July's 14.1 million total vehicle sales is forecast.
(10 a.m. ET) U.S. construction spending for July. Economics expect a 0.4 per cent rise, matching the month-over-month gain in June.
THIS MORNING'S TOP READS ON THE WEB:
Even Italy has outperformed Canadian stocks
So just how lousy has Canada's stock market performance been compared to global markets so far this year? Consider this fact: Italy, near ground zero of the euro crisis, has been outperforming ours on a year-to-date basis
Apple bulls beware
September is historically the worst month for U.S. stocks -- and Apple is definitely no exception. This month is far and away the worst for what is now the world's biggest company
Bill Gross says QE3 won't work
Pimco head Bill Gross thinks the Federal Reserve will embark on more quantitative easing this month. But he says forget about it doing much for the country's job market.
Indicator suggests market tumble
The volatility index known as VIX, when looking at very long term trends going back decades, is signalling a stock sell-off lies ahead.
SNC-Lavalin may be oversold
Shares in SNC-Lavalin Group, which has had its fair share of controversy this year, stumbled lower every day last week and, according to the technical analysis indicator called the Relative Strength Index, has now entered oversold territory.
ETF world getting too crowded
Two exchange traded fund providers in the U.S. -- FocusShares and Russell ETFs -- announced they were closing up shop last month. It joins many other ETFs that recently called it quits in the U.S., but the closing of these two funds may signal something more significant because they were genuinely good products.
What thin trading volumes suggest
Equity trading volumes in recent weeks have been the thinnest in years, leading some to speculate the recent rally in U.S. stocks doesn't have much staying power. But there are a number of reasons behind the light volumes, including a lack of stock splits (hello Apple) and mutual fund companies having less money to invest. So what does it mean for the rest of the year?
U.S. dividend stocks fall out of favour
A few months ago, U.S. investors couldn't get enough of high dividend payers. Now they want nothing to do with them. There was a big difference in performance between high yielders and low or no yielders in August
Darcy Keith