Stocks recovered from their lows to close mixed on the first trading day of September, but a pair of disappointing economic reports and jitters ahead of the ECB meeting later this week kept a lid on gains.
“These quick turnarounds are not surprising—You’ll find markets bouncing around between these technical levels,” said Keith Bliss, senior vice president at Cuttone & Co.
Stocks were under pressure for most of the session, with the Dow dipping below the psychologically-important 13,000 level and the S&P 500 trading under 1,400, before paring their losses around 2pm ET.
The Dow Jones Industrial Average recovered from its lows but still dropped 54.90 points, or 0.42 percent, to close at 13,035.94, dragged by Caterpillar and United Tech . The blue-chip index was down 113 points at session lows.
The S&P 500 dipped 1.64 points, or 0.12 percent, to finish at 1,404.94. The Nasdaq squeezed out a gain of 8.10 points, or 0.26 percent, to end at 3,075.06.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, climbed near 18.
Among the key S&P sectors, industrials and materials led the laggards, while telecoms gained.
“We should start getting used to these big [market swings]—there will be a lot of headlines in the next few weeks and that’s what’s going to define this fall,” said Brian Battle, vice president of trading at Performance Trust Capital Partners. “It’s remarkable that we’ve had any sort of rally whatsoever in the absence of any fundamental growth and it’s inexplicable that we should be at these prices—this seems to be like the calm before the storm.”
Last week, all three major indexes logged their first gains in August since 2009, lifted by Federal Reserve Chairman Ben Bernanke’s Jackson Hole speech on Friday, in which he reiterated the central bank was ready to act if necessary. Bernanke also said the Fed would continue to hold interest rates at near-zero, and indicated this was unlikely to change before 2014 at the earliest. (Read More: Market Pro Sees Major Stock Selloff in 10 Days)
On the economic front, manufacturing contracted at its sharpest rate in more than three years in August, according to the Institute for Supply Management. And construction spending fell by the most in a year, according to the Commerce Department.
