September has been the worst month for the stock market over the past 80 years, and it begins with many analysts already worried that investors have bet too soon on a recovery. Data due Tuesday on manufacturing and employment on Friday could upend the market's six-month-old rally or help push it forward.
For the day, the Dow fell 47.92 points, or 0.5%, to 9496.28, while the S&P 500 dropped 8.31points, or 0.8%, to 1020.62. The Nasdaq was off by 19.71 points, or 1%, at 2009.06.
Those losses came as anxiety rippled through markets after the Shanghai Composite fell 6.7%, its greatest decline of the year. Among the contributing factors were an expected decrease in loans made by Chinese lenders, news that Metallurgical Corp. of China is planning a 16.85 billion yuan ($2.46 billion) initial public offering, and a wider-than-expected decline in first-quarter profit at China Merchants Bank.
"[The Chinese market] definitely has a major topping pattern potentially forming, and historically China led us on the way up, so the big fears are obviously if the Chinese markets are starting to top here, what's that going to do to the overall global economy and to the U.S. economy," says Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.
"In the short-term we remain cautious but not bearish," writes Jeffrey Saut, chief investment strategist for Raymond James, "because we think the equity markets will be higher by year-end than they are now.
Trading is expected to be light this week but there are still several important reports on the economy that could sway the market one way or the other.
The most closely watched piece of data this week will be the government's monthly jobs report on Friday. Economists are expecting another 220,000 jobs were lost, down from 247,000 in July.
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