Stock Market News for August 31, 2010

That the U.S. stock market would not replicate July’s performance is almost certain now, but what is really disquieting is it could be the worst August in almost a decade. Merger deals notwithstanding, mood on Wall Street turned grim yesterday as worries about the pace of the economic recovery kept traders away from stocks.

Ahead of key economic reports due later this week, investors turned cautious and sold stocks. Traders are worried that the economy might slip back into recession. Monday's two billion dollar deal announcements, a $1.6 billion bid from 3M (NYSE:MMM - Analyst Report) for Cogent (NASDAQ:COGT) and Intel’s (NASDAQ:INTC - Analyst Report) $1.4 billion offer for Infineon's wireless unit, failed to provide the much-needed fillip.

The Dow industrials fell 141 points, or 1.4%, to close at 10,009.73. The Standard & Poor's 500 index dropped 15.67 points, or 1.5%, to 1,048.92 and the tech-heavy Nasdaq composite index dropped 34 points, or 1.6%, to 2,119.97. The tech-heavy index is currently running at a 4.8% August drop. On the New York Stock Exchange, five stocks dropped in price for every two that rose as volume dropped to 818 million shares.

Bank of Japan’s announcement to stimulate the domestic economy by increasing a special bank lending program failed to reverse yen’s recent rise as it found little concurrent support from fellow central banks.

Of the thirty-DJIA components, only Hewlett-Packard (NYSE:HPQ - Analyst Report) could manage gains on the day. Shares in the company advanced 1.5% after the firm announced $10 billion additional share buyback program and USAF awarded a purchase contract worth up to $800 million to the company. Pulling the DJIA lower were Home Depot (NYSE:HD - Analyst Report), off 2.6%, American Express (NYSE:AXP - Analyst Report) down 2.5%, and Bank of America (NYSE:BAC - Analyst Report), down 2.5% to a 13-month low, down 2.5%, on concerns regarding consumers' health and ability to pay off debt loads as housing markets continue to weaken and income levels soften.

All ten S&P500 industry sectors fell on the fell day. Leading the drop were financials (-2.2%) consumer services (-1.6%), consumer goods (-1.6%), utilities (-1.5%) and oil and gas (-1.4%). Technical charts show S&P’s drop to multi-month lows of 1011 is possible.

On Monday, Intel (NASDAQ:INTC - Analyst Report) shares largely gave away Friday's 1.1% rise. Yesterday's 2.2% drop followed the company’s $1.4 billion offer for Germany-based Infineon's wireless unit. The shares also suffered after at least six brokerages lowered their price targets on the firm.

Read the full analyst report on MMM

Read the full analyst report on COGT

Read the full analyst report on INTC

Read the full analyst report on HPQ

Read the full analyst report on HD

Read the full analyst report on AXP

Read the full analyst report on BAC