U.S. stocks are starting a fresh month in correction mode with the Dow Jones Industrial average falling triple digits, down more than 400 points. The Nasdaq composite gave back all gains for 2015. The S&P 500 hovered and quickly dipped in and out of correction territory.
Disappointing economic data from China greeted traders before the open. Similarly weak readings on the U.S. economy kept sentiment low with the weakest ISM manufacturing index report in two years. The strong dollar was to blame for manufacturers struggling to sell their goods overseas, pushing the August ISM figured to 51.1 from 52.7 the prior month.
But investors should not fear a bear market, despite the recent turmoil in stocks and Tuesday’s weak economic data, according to LPL Financial. “It’s more of a correction, not a bear market. You normally don’t get bear markets unless there’s a recession, and the odds of a recession over the next 12 to 18 months in the United States are relatively low,” said John Canally, the firm’s chief economic strategist.
Get the Latest Market Data and News with the Yahoo Finance App
The economic data investors are scrutinizing the most this week is the highly anticipated August jobs report. Ahead of the FOMC meeting in mid-September, Canally doesn’t think Friday’s labor figures will sway the Fed’s decision on a rate hike this month. “If we get an extremely strong number especially on the wage side, the Fed might stand up and take notice,” he said. But the economist is expecting another trend-like jobs report, “I would be very surprised if it wasn’t right between 200,000 - 250,000.”
Looking ahead on how the market’s recent turmoil and the disruptions in China will affect the American economy, “it might not show up in the job market itself until perhaps the end of the year,” said Canally.
More on Yahoo Finance
September swoon? Stocks pummeled as global growth worries mount
Stocks slammed; Fed rate hike in limbo?; Hedge funds pounded
