Sam Collins

What's in Store for the Markets Post-Labor Day?

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A sharp sell-off in China sent shock waves around the financial world yesterday, and U.S. stocks were hit, too.

On Monday, the Shanghai Composite Index fell 6.7%, hitting a three-month closing low as the government tightened credit. Technology stocks took the brunt of the impact from Shanghai, but a late rally erased half of the losses, and the S&P 500 (SPX) closed lower by only 0.8%.

The Dow Jones Industrial Average (DJI) fell 0.5%, with Alcoa (AA), Caterpillar (CAT) and Boeing (BA) falling more than 3%.

At the end of the day, losses were marginal with health care stocks down 0.2%, financials off 0.4%, and diversified banks up 0.8%. 

Some traders cited nervousness over the results in China and others worried that September historically has been a difficult month for stocks. They have averaged a decline of 1.1% in September using data going back to 1900. According to Ned Davis Research, and quoted by the Wall Street Journal, September is the only month that has negative performance over that time frame.

The worst losses yesterday were in energy and basic commodities.

BJ Services (BJS) bucked the trend and was up 9.63% because of its buyout by Baker Hughes (BHI), which fell 3.64%. 

In another M&A story, Disney (DIS) announced a takeover of Marvel (MVL). DIS fell 0.8% and MVL gained 9.72%.