U.S. stock markets outlook september 6 2011

U.S. stock markets outlook september 6 2011 : Wall Street braced for losses on Tuesday after world stock markets took a beating over fears that the U.S. economy was heading back into recession.

Any troubles in the world's largest economy cast a long shadow over the markets, and a report Friday that the U.S. economy failed to add any new jobs in August caused European and Asian stock markets to sink sharply Monday.

That jobs figure was far below economists' already tepid expectations for 93,000 new U.S. jobs and renewed concerns that the U.S. recovery is not only slowing but actually unwinding. U.S. hiring figures for June and July were also revised lower, only adding to the gloom.

The full impact of the jobs report will hit U.S. markets on Tuesday, since trading there was closed Monday for the U.S. Labor Day holiday.

The jobs crisis has prompted President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring.

Until then, however, traders coming back from the U.S. holiday weekend will have little to hold onto. The uncertainty has already pushed many to pull out of any risky investments — such as stocks, particularly financial ones, the euro and emerging market currencies — and pile into safe havens: U.S. Treasuries, the dollar, the Japanese yen and gold.

With Wall Street closed, investors focused their selling drive in Asia and Europe, where the equity losses Monday were some of the heaviest this year.

"We've got some rough riding ahead," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago, adding he was "concerned that we could see a second wave of selling when most traders are back at their desks."

Dow futures were down 1.8 percent at 11,010 points while the broader S&P 500 futures were 2.0 lower at 1,145.70.

The health of the U.S. economy is crucial for the wider world because consumer spending there accounts for a fifth of global economic activity. The U.S. imports huge amounts from Japan and China and is closely linked at all levels with the European market. Beyond its lack of jobs growth, the U.S. has seen a slump in consumer and business sentiments.
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Traders were hoping for signs that the Federal Reserve might take action at its September meeting to support the economy — perhaps a third round of bond purchases, dubbed quantitative easing III or QE3, analysts said.

"Right now the possibility has increased," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "I think they have to do something. The markets are expecting QE3."