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Investors Hope for Turn-Around after Market Plunge

09-07-2014
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Investors are hoping for a better day on Wall Street, following Monday's 326-point drop of the Dow Jones industrial average. It was the biggest one-day decline for the blue-chip index since June 2013.

The Standard & Poor's lost 40 points, and the NASDAQ dropped 2.6 percent.

Meanwhile, manufacturing dropped to an eight-month low. One reason? A report showed that U.S. manufacturing barely expanded last month, dropping to an eight-month low.

The weather also factored into the economy last month. As record-cold and snow brought small businesses to a grinding halt, investors worried it would spill over to the job market.

Still, many stock watchers took the market's decline in stride, calling Monday's action just a recalibration following record-highs at the end of last year.

"Based on today's close, the S&P 500 is now in a pullback mode, meaning it's declined between five and 10 percent. My belief is that we probably won't go beyond the 10 percent zone," Sam Stovall, chief equity strategist for S&P Capital IQ, predicted.

Frank Davis, director of trading at LEK Securities. agreed.

"I think we are in correction phase and the bias will be to the downside for a while longer," he said. "It would make sense to see a healthy pullback after last year. Air has to come out of the market."

Meanwhile, fresh signs of economic weakness in China also weighed on the minds of investors.

Any signs of slowdown in China's economy, the world's second largest, could spell bad news because it's a key trading partner for developing countries such as South Africa and Indonesia.

For now, most analysts think we are only seeing a temporary pullback in prices that's not over yet.

"I think investors are now worried that global economic growth could be hindered," Stovall said.

But analysts still expect stocks to rise in the longer term. The recent market drop means the typical American family's retirement savings has lost about $6,000 in the past month.

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