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) for Cogent (NASDAQ:COGT) and Intel’s (NASDAQ:INTC) $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) 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), off 2.6%, American Express (NYSE:AXP) down 2.5%, and Bank of America (NYSE:BAC), 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) 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.

Zacks Investment Research

1. (AA) Stock Market News for August 25, 2010U.S. stocks plunged on Tuesday, falling to their seven-week lows, on renewed fears that the...
2. (BA) Stock Market News for August 24, 2010U.S. stocks dropped on Monday as economic worries prevailed over early-morning enthusiasm resulting from Hewlett’s...
3. (BHP) Stock Market News for August 23, 2010 – Market NewsStocks fell for a second consecutive week as persistent worries about the economy continued to...
4. (DELL) Stock Market News for August 28, 2009 – Market NewsU.S. stocks recovered from early losses to end the day slightly higher, helped by a...
5. (STI) Stock Market News for August 25, 2009Major average closed essentially flat Monday as cautious investors chose to halt last week’s buying...
6. (HPQ) Stock Market News for August 20, 2009 – Market NewsA sharp rebound in Chinese shares helped erase yesterday’s slump and sent Asian stocks sharply...

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