Accessibility links

US Stocks Down Monday but Hold Past Week's Gains

U.S. stock prices posted modest losses Monday, holding on to most of the gains from Friday's big rally. Investor turnout on Wall Street was especially light, in anticipation of the long Labor Day weekend coming up. The Dow Jones Industrial Average dropped 40 points, less than a half of one percent, to 10,382. The broader Standard & Poor's 500 index lost five points, while the tech-weighted NASDAQ composite slipped four points.

Investment strategist Hugh Johnson says investors remain nervous about the bleak corporate earnings outlook, which makes many stocks still seem overvalued.

"The worry is that the profit side of the valuation picture just isn't going to be there," he said. "I think it will be there. But investors, many investors, just don't share that view."

The slowing global economy continues to impact corporate payrolls. U.S. machine-maker Deere is eliminating nearly 2,000 more jobs. And Japanese chip-maker Toshiba says it will cut almost 20,000 jobs worldwide, about 10 percent of its workforce.

This week's economic data could give a clue about where the U.S. stock market is heading. New consumer confidence figures are due out Tuesday. They are considered critical information. Analyst Peter Kenny believes investors will be cheered if the numbers are positive.

"Consumer confidence. Two words. Those are the two key words that are going to give this market either continued strength or are going to take this market apart to some extent," he said. "As long as the consumer is happy and spending money, this market is fine."

Consumer spending fuels two-thirds of U.S. economic growth.

Meanwhile, latest figures on the housing sector out Monday show a dip in what has been the strongest part of a weaker U.S. economy. Sales of existing homes fell three percent in July, more than expected.