Ospraie's Anderson forced to shut flagship

BOSTON - In the world of palladium, gold and soy beans, hedge-fund manager Dwight Anderson was known as an imposing figure with an appetite for risk.

At 6-foot-3-inches (1.9-metres), Anderson's towering physical presence was long matched by towering returns at his flagship 9-year-old hedge fund, one of several portfolios managed at Ospraie Management LLC, the world's biggest commodities hedge fund firm.

But the 41-year-old investor, whose flagship Ospraie Fund Ltd returned 15 percent a year on average from 2000 to 2007 with $3.8 billion invested at its peak last year, may have attempted to climb too far too fast, say investors in his fund.

Anderson confirmed on Tuesday what had been rumored in the $2 trillion industry for days -- the Ospraie Fund lost 27 percent in August, forcing him to close it with a crippling 39 percent loss for the year.

Anderson, who launched the Ospraie Fund while working for another hedge-fund legend, Paul Tudor Jones of Tudor Investment Corp, joins a growing list of prominent fund managers forced to shut funds or firms amid heavy losses in the last few months.

"After nine years of striving to be a good steward of your capital, I am very sorry for this outcome," he wrote on Tuesday in a letter to investors such as Lehman Brothers, Credit Suisse and smaller endowments.

More details would come on Thursday, he added.

The hedge fund firm still manages other portfolios, including the $1.2 Ospraie Special Opportunities Fund.

Many investors were drawn to Anderson's laser-like focus on the long-overlooked commodities sector where he logged millions of air miles inspecting mines and corn fields around the globe.

Two investors who declined to be identified expressed concern that his 80-person firm's recent expansion might have been too quick at a time when many large investors were making big bets on commodities.

Anderson could not be reached for comment.

His investments, once limited to hard and soft commodities, expanded to include companies active in the sector. His operations also expanded. Ospraie Management's purchase this year of ConAgra Food's commodities trading unit vaulted the company into a new direction, investors said.

"Dwight Anderson was a rare breed and one of only a few people who really focused on commodities and ignored momentum trading in favor of value-based investments," said one investor who asked not to be identified. "But this kind of thing shouldn't happen and I blame it on poor risk management."

At work and at play, Anderson embraced risk, people who know him said.

He acquired a taste for commodities while earning his MBA at the University of North Carolina and quickly moved from a job on JP Morgan's commodities desk into the hedge-fund industry to work with industry icon Julian Robertson's Tiger Management fund, and then to Tudor.

In 2004, with Tudor's help, he started his own New York- based hedge-fund firm, which manages at least three funds.

In his free time he has jumped out of airplanes with skis strapped to his feet and raced ahead of stampeding bulls in Pamplona, according to an acquaintance.

Two years ago, Anderson and his investors got a jolt when souring bets on copper sent the Ospraie Fund tumbling roughly 20 percent. Anderson and his team recovered some ground, paring nearly all losses that year. Separately he shuttered a $250 million fund in 2006.

U.S. Stocks at 25.8 Times Earnings Means Rally Can't Continue

The best already may be over for the U.S. stock market this year.

The Standard & Poor's 500 Index, which had the worst first half since 2002, added 0.2 percent this quarter, the only gain among the world's 10 biggest markets in dollar terms. Shares in the benchmark index for American equity climbed to an average25.8 times reported profits, the highest valuation in five years. The last time that happened, the S&P 500 fell 38 percent.

Money managers at Federated Investors Inc., Russell Investments and Morgan Asset Management, which oversee a combined $600 billion, said the gains won't last because corporate profits will fail to meet analysts' estimates. Wall Street forecasters, who were too optimistic about earnings for the past four quarters, predict income at America's biggest companies will grow by a record 62 percent in the final three months of 2008, according to data compiled by S&P.

``The market is pricing in the expectation of a good quarter, but we just don't see it,'' said Philip Orlando, who helps manage $350 billion as chief equity market strategist at Federated in New York. ``The fundamentals are going to be poor, earnings are going to be bad, and there are going to be more huge writedowns. We think stocks probably need to work 5 to 10 percent lower over the next month or two.''

Analyst estimates were at least 26 percentage points too high since the fourth quarter of 2007 as they failed to anticipate more than $500 billion of subprime-related bank losses and a slowing economy, according to data compiled by S&P and Bloomberg.

Rising Multiples

The S&P 500 slipped 0.7 percent

last week, its second straight retreat, as growth in consumer spending slowed and incomes fell. The index fell 13 percent this year, led by a 27 percent decline in a measure of financial stocks. A combination of rising prices and falling earnings caused S&P 500 valuations to surge more than 20 percent this quarter, the biggest increase of any major market, making them the most expensive since November 2003.

The index's price-earnings ratio rose above 25 three times in the last five decades, data compiled by Bloomberg show. The last was in 2001, during the bear market that followed the bursting of the dot-com bubble. The increase in valuations preceded a plunge that helped erase about half the market value of U.S. companies.

The ratio is being propped up now by analyst forecasts that call for the end of four quarters of slumping profits, the longest streak in seven years.

Discounted Risk

S&P 500 companies will report aggregate earnings of $21.69 a share in the current quarter, a gain of 3.9 percent from a year ago, and $24.62 a share in the final three months of 2008, 62 percent higher than last year's fourth quarter, based on projections compiled by S&P. The earnings reflect estimates for the index, adjusted for each company's weighting.

RidgeWorth Investments' Alan Gayle says prices already discount the risk of a recession, making U.S. equities attractive as profits slow internationally.

Nations sharing the euro may expand 1.5 percent this year, the slowest since 2003, according to the median forecast in a Bloomberg survey of economists. Japan, the world's second-largest economy, will grow 1.05 percent, a six-year low. China, the fastest-growing major economy, may have its smallest expansion in five years.

``The U.S. economy, while not strong, has a greater visibility of the bottom,'' said Gayle, the Richmond, Virginia- based chief investment strategist at RidgeWorth, which oversees $70 billion and went ``overweight'' U.S. stocks a month ago. Outside the U.S., ``the risk factor in the earnings estimates is a little higher than you might see on Wall Street.''

Gap, AK, Lexmark

More than 360 companies in the S&P 500 trade below the average valuation, providing opportunities to investors who pick individual stocks. Gap Inc., the biggest U.S. clothing retailer, AK Steel Holding Corp., the fourth-largest U.S. steelmaker by market value, and Lexmark International Inc., the second-biggest U.S. printer maker, are priced below 15 times earnings, even after reporting income gains of more than 30 percent in the second quarter.

Investment banks are advising clients to buy stocks in anticipation of the earnings rebound. The average forecast of 10 strategists tracked by Bloomberg is for the S&P 500 to rise 14 percent from last week's close to 1,456.50. Thomas Lee, chief U.S. equity strategist at New York-based JPMorgan Chase & Co., said last month that U.S. equities will rise ``much higher'' as profits improve.

Should analysts overstate profits in the second half by the degree they did last quarter, earnings for S&P 500 companies will fall to about $72.17 a share. That would be below the level of 2005, when the S&P 500 was on average 5.9 percent lower than today.

`Fundamental Problems'

The U.S. economy won't support the earnings analysts predict, said Walter ``Bucky'' Hellwig, who oversees $30 billion at Morgan Asset Management in Birmingham, Alabama.

Economists forecast U.S. economic growth will slip to 1.5 percent this year from 2 percent in 2007 as demand for exports wanes, according to a Bloomberg survey.

Exports accounted for all but 0.2 percentage point of the U.S. expansion last quarter, when the economy grew 3.3 percent. The jobless rate rose to 5.7 percent in July, the highest since 2004, and consumer spending increased at the slowest pace in five months, government reports showed.

``Despite this upturn in the stock market, the fundamental problems are still out there,'' Hellwig said. ``Those issues haven't gone away. That would necessitate a ratcheting down of earnings estimates, and that would imply lower stock prices.''

Steinhardt's Doubts

The most bullish profit forecasts are for U.S. financial companies. In the fourth quarter, brokerages and insurers will boost earnings almost fivefold from a year ago, analysts say.

``I don't believe we're through this credit crunch,'' said Stephen Wood, New York-based senior portfolio strategist at Russell Investments, which oversees $213 billion. ``Credit portfolios are beginning to deteriorate. Financials will continue to exert downward pressure on earnings for the balance of 2009.

'' Bank of America Corp., which earned 7 cents a share in the fourth quarter of 2007 after doubling reserves for potential loan losses to $3.3 billion in the period, will make 77 cents next quarter, according to analysts surveyed by Bloomberg. The Charlotte, North Carolina-based lender, the second biggest in the U.S., gained 30 percent this quarter.

Citigroup Inc., the largest U.S. bank, advanced 13 percent. Analysts estimate the New York-based company, which reported $55.1 billion in losses and writedowns, the most of any financial institution, will earn 43 cents a share in the fourth quarter. That compares with a loss of $1.99 a year ago, Citigroup's biggest.

Michael Steinhardt, who returned an average 24 percent a year for almost three decades when he ran his New York-based hedge fund Steinhardt Management Co., said forecasts for an earnings rebound are a false hope.

``My intuition is that they are too early,'' he said. ``In an ordinary cycle, this should be the time to start thinking about buying. This isn't an ordinary cycle.''

羅盤測股準確率95%,股高股低不怕一估

每逢農歷新年，華人都愛找現代玄學家看風水、測命理，希望洞悉先機，趨吉避凶。

然而，各地政治經濟變化一環扣一環，玄學家測股市，又有多高的準繩度？

玄學家測股市的要素是看“人氣”和“財氣”，人氣聚則漲，人氣散則落。

惟國內玄學家葉大偉，只需手握羅盤，即能知全球投資市場走向！

投資者能完全掌握股市走勢，信不信由你！

玄學投資大師葉大偉在因緣巧合下，將玄學知識套用在投資市場，多年來終成功開發《東方訣數》投資技術，能夠測出全球投資產品價格走勢，準確度高達95%。

葉大偉親自向《中國報》讀者診斷馬股市未來“運情”。

他受訪時說，綜合指數創下1524點新高后，即進入盤整期，從《東方訣數》角度分析，馬股市7月、8月和9月份將表現慘淡，特別是9月份，將出現新低點。

“9月份馬股將迎來第一個挑戰，綜指能否把關1000點受到考驗，若不幸失守，情況令人擔憂，將陷入780至980點低水平。

“但我認為，綜指不可能跌至800多點，這將違反自然投資生態原則。”

他指出，8月和9月份是買股好時機，投資者宜趁低買入，採用一般的投資策略，即“低價買高價賣”。

明年6月轉強

“馬股將在11月和12月份反彈收高，屬于收拾腹地，並非再掀漲潮。”

葉大偉說，以個人的玄學鑽研功力，可利用《東方訣數》推算馬股未來3至5年的走勢，甚至個別股項的單日表現。

“估計2009年6月份，全球股市將逐步轉強，會出現另一輪牛市漲潮，是不可錯過的買賣時機，好行情將直到2010年初。”

惟他提醒投資者，2010年6月直到年底，全球股市將在毫無預警下掉入“崩盤”走勢，建議投資者趁早套現離場。

股票市場常言“5窮6絕7上吊”，反映股市行情看淡；若葉大偉推算準確，馬股目前的跌勢至少持續至9月份。

葉大偉說，國內投資者劃分3類，即不相信預測週期，著重公司基本面和業績報告、靠貼士過活，及採用西方技術分析或東方玄學測算股市走向。

他坦言，本地甚少投資者接受或熟悉玄學投資法，嚴重缺乏相關知識。

掌握投資金鎖匙

《東方訣數》是一套全面投資技術，涵蓋“密碼”、“實戰”、“管理”和“修為”四大層面。

葉大偉指出，對玄學一竅不通的投資者，只需騰出一天的時間就可掌握《東方訣數》的基本概念和運作。

《東方訣數》投資技術的主要工具是“羅盤”，一旦掌握全套技術，就可在全世界闖江湖，適合測算各類投資產品，包括期貨、股市、原產品及外匯等。

葉大偉形容《東方訣數》猶如一把投資金鎖匙，可開通全球任何一道投資大門，沒有地域限制。

另一面，葉大偉說，自國際原油價格突破每桶145美元（約482.85令吉）后，《東方訣數》分析數據顯示，油價上漲空間明顯增大，年底可能漲升至198美元（約659.34令吉）。

10年週期

他預測，油價99%不衝破200美元（約666令吉）天價，將從近200美元價位至少滑落30%至40%。

另外，他指出，美元指數下跌7年，“7”在玄學和聖經中有重要的地位。

“美元是世界眾多國家的掛鉤貨幣，最近很多國家的貨幣幣值，因美元貶值而顯著升值，但情況或在2008年下半年出現改變。”

“美元指數已跌無可跌，隨時反彈回升，最快將在下半年，最遲2009年初。”

葉大偉說，10年前，索羅斯狙擊亞洲金融體系，導致1997年亞洲陷入金融風暴，打擊各行各業，股市暴跌，使許多華資企業家傾家蕩產、家離子散。

他指出，10后的今天，雖然沒再發生股災，卻因為原產品價格高漲，全球引發通脹憂慮，同樣是經濟困境之一。

堅守8020原則

葉大偉秉持“多算多勝，少算少勝”的投資精神，測算股市下一分鐘起或跌，推算效果驚人。

他說，研究《東方訣數》時，為了證實技術分析的準確性，公開在媒體刊登走勢預測，及預先預測金融市場走勢和即將發生的重大變化，而非“馬后砲”。

“就以美國爆發次級房屋貸款危機為例，2007年7月11日、18日、20日和25日，我們連續幾天在報章刊登小訊息‘7月尾清場，8月始轉勢；10月榴槤跌，某國有大劫’。”

“結果，全球股市于7月29日后暴跌。”

葉大偉指出，雖然預測準確度達95%，但仍以最保守的態度推算，堅持“8020”原則，即80%命中率，20%為市場實際變化率。

“測算結果再準確，也必須緊貼市場脈搏和觀察每一個細微的變化。”

他坦言，研發《東方決數》成功后，曾與股票經紀一同上班，天天到證券行報到，常常5分鐘即賺進400至500令吉。

惟后來覺得大馬投資市場欠缺透明度，隨后把戰場轉移到國際投資市場。

葉大偉簡介

葉大偉自小對中國術數如五行、陰陽、命理、風水、奇門、八卦、像數、九宮等五術玄學都有濃厚興趣，並拜訪許多明師，長期深入研究。

葉畢業于電腦系，1996年求學時期創辦公司，在許多國際展銷會中創下全場最佳銷售量的佳績，成為頂尖銷售商。

可惜1997年暴發亞洲金融風暴，許多大公司週轉失靈倒閉，在這場浩劫中，葉大偉無法倖免，身邊親朋戚友也紛紛因投資股市失利面臨困境。

葉大偉在投資生涯中起起跌跌，后來因緣巧合之下，向另一位師交學習命理玄學，尋找人生答案。

外人眼中，一名商人“淪落”成為一名風水師，實在是慘不忍睹。

事實上，這際遇給他在日后開發《東方訣數》埋下伏筆。

The four horsemen of the market

Heed the sobering investment advice of these veteran money managers

SAN FRANCISCO - As investors, they fly solo. As market observers, they don't lead or follow as much as go their own way. It's tempting to dismiss their Cassandra-like warnings as overly pessimistic and hopelessly out of step, but their track records show that can be a costly mistake.

Jeremy Grantham, Bob Rodriguez, John Hussman and Steve Leuthold are contrarian-minded investors and opinionated commentators who share one thing in common: Those who buy into their funds never know exactly where their money will be parked. It could be emerging markets or alternative energy, high-yield debt or Treasurys. And if these risk-conscious money managers don't see compelling values, they might hedge their portfolios against unruly markets or even stash a good chunk of shareholders' assets in cash until better bargains appear.

You might call them the Four Horsemen of the Market, riding ahead of the predictable approaches and traditional thinking that defines most of the mutual-fund business. While these strategists display individualistic tailoring and design, what they have to say about stock and bond markets and economic conditions should get investors' collective attention.

Jeremy Grantham: 'Officially scared'

Jeremy Grantham is not given to false alarms. The chief investment strategist at GMO, the highly regarded Boston-based manager of institutional and high-net-worth accounts, makes buy and sell decisions with a combination of computerized technical analysis and old-fashioned spadework. But nowadays, his digging for attractively valued stocks is mostly hitting rocks, and that has Grantham deeply concerned.

"The fundamentals have turned out to be worse than I had thought," Grantham said. "My advice would be, don't take any risk."

What he means is that in this market, don't be a hero; live to fight another day. Here's why: Global economic growth is slowing under the weight of increasingly illiquid credit markets and inflationary pressures. Weaker growth slashes corporate earnings, and since stock prices are tied to earnings, the outlook for equities worldwide, as Grantham sees it, is poor to middling.

"I don't consider myself a 'perma-bear,'" Grantham said. "Merely a realist."

It's a grim reality, to be sure. In Grantham's world view, stocks in both developed and emerging markets are "substantially overpriced," with the possible exception of high-quality blue-chip companies that have strong, defensible global franchises.

"I underestimated in almost every way how badly economic and financial fundamentals would turn out," Grantham wrote shareholders in a July letter. "Events must now be disturbing to everyone, and I for one am officially scared!"

One of his biggest fears, he added in an interview, is that "the whole global economy will be weaker than the market expects for quite a considerable time." How long? "I would guess at least two years of sustained disappointment."

Notably, just a few weeks ago Grantham turned negative on his "beloved" emerging markets, which had been a spot-on bullish call. "If the global economy is going to disappoint, the cost of holding them just seemed too high," he said.

Grantham is particularly uneasy about China, a leading engine of world growth that seems to be sputtering. "I worry on behalf of the global economy at the consequences of China stumbling," he said. Without China's robust demand, he added, "the whole level of global imports and exports would start to drop."

Don't hide under the mattress just yet. Grantham points out that many of the world's strongest companies are based in the U.S., which could help the U.S. market's relative performance. Moreover, he said, the weaker global picture will benefit the U.S. dollar, so the American market could turn out to be "a safe haven."

Bob Rodriguez: 'Buyer's strike'

Bob Rodriguez wants to be left alone. The manager of FPA Capital Fund and bond-focused sibling FPA New Income Fund has since June 2003 been on a self-proclaimed "buyer's strike" regarding high-quality bonds with maturities greater than two years.

Rodriguez believed then -- and is even more convinced now -- that longer-term Treasury yields aren't substantial enough to compensate investors for inflation's eroding impact on purchasing power. He wants to get 5% on 10-year Treasurys, which recently yielded 3.8%, before venturing back.

Consequently, Rodriguez continues to focus on "caution and capital preservation," as he explained to fund shareholders in a June letter. More than 40% of Capital Fund, for example, is given to short-term government agency and Treasury notes and cash.

"We will not provide long-term capital to borrowers with unsound and unwise business management practices at unattractive real yields," Rodriguez wrote. That includes the U.S. government, he noted. "We require a higher level of compensation -- i.e. more yield, for these potential risks."

The line in the sand hasn't hurt performance, however. Capital Fund, which is closed to new investors, has gained about 9% over the five years through Aug. 27, matching its midcap-value peers but with much less risk. New Income, meanwhile, is open to new money; it's 4% annualized five-year gain also was achieved with below-average risk.

"He's not naturally the most optimistic person you'll ever chat with," said Christopher Davis, a fund analyst at investment researcher Morningstar Inc. "Even in the best times he's looking for the gray lining in a silver cloud. That's one of the reasons you invest with him."

As for stocks, the value-oriented fund manager was early to embrace the energy sector several years ago and has hung on for the ride. And not surprisingly, Rodriguez steered clear of banks and other financial-services firms even as many of his value-driven counterparts saw bargains.

"By my calculation he adds about two percentage points a year through market timing or varying his exposure" to stocks, said Robin Carpenter, principal of CarpenterAnalytix.com, which develops investment tools for money managers. "That's a big number when it's added on top of the other returns you're getting. Some managers would kill for two extra percent."

Rodriguez declined requests to be interviewed.

John Hussman: 'Stay defensive'

It's tough to put John Hussman in a box. Not that you'd want to. Hussman runs two portfolios: stock-focused Hussman Strategic Growth Fund and bond-centric Hussman Strategic Total Return Fund. Both are run with a careful eye to valuations and broad economic conditions that dictate the degree of market risk that Hussman is willing to accept.

For Hussman nowadays, risk-taking doesn't offer much reward. "We're fully hedged," the fund manager said, meaning that a portfolio won't be affected, positively or negatively, by market gyrations.

The reason? Hussman said he's looking for another shoe to drop once investors recognize that the U.S. has not avoided recession.

"The stock, bond and foreign-exchange markets continue to trade essentially on the theme that the global economy is weakening, but that the U.S. has dodged a recession," Hussman wrote in his weekly market commentary in late August.

Investors' consensus is mistaken, Hussman contends. He said the U.S. is mired in recession, and once investors realize that earnings expectations are overblown, stocks will take another major hit.

"The potential downside could be abrupt, leaving little opportunity to make defensive changes after the fact," Hussman wrote.

While Strategic Growth's hedges insulate it from the market's volatility, Hussman is anything but neutral. The portfolio is fully invested in stocks, and how these selections fare determines the fund's return.

"What drives our fund is the difference in performance between the stocks we own and the indices we use to hedge," Hussman said.

That said, Hussman doesn't expect much from stocks. He predicted that U.S. market returns will average 4%-6% annualized over the next decade, primarily due to weaker corporate earnings. Given that slower-growth view, Hussman dumped most of his exposure to the commodity, industrials and precious-metals sectors, which thrive in expansionist periods, and he's spotted bargains in consumer-related industries such as health-care products and medical devices; one of Strategic Growth's top holdings is Johnson & Johnson.

"A lot of those [consumer] names in my view got too far depressed," Hussman said.

He also sees value in technology stocks, and at the end of June Strategic Growth had meaningful stakes in Amazon.com and Research in Motion Ltd.

Steve Leuthold: 'Pretty positive'

Steve Leuthold has been called a "superbear" for his extreme pessimism about stocks during the bull run of 1998, and more recently a year ago when stock exposure in flagship funds such as Leuthold Core Investment Fund and sibling Asset Allocation Fund barely scraped 30%.

Leuthold is a colorful figure, offering targeted portfolios with catchy names like the bear-market Grizzly Short Fund and the bottom-fishing Undervalued and Unloved Fund.

But Leuthold is straightforward about stock research, and he goes where it tells him. So he didn't balk a couple of weeks ago when the signs all said "buy."

Now Leuthold's allocation-driven portfolios are covering short positions and other hedges and moving from a neutral, 50-50 equity/bond allocation toward 60% stocks -- nearing their 70% maximum threshold.

"Our whole office is surprised," Leuthold said in an interview "This is quite a departure for us. I don't believe I've ever seen such a dynamic change, going from mildly negative through neutral to pretty positive."

Like Hussman, Leuthold is convinced that the U.S. economy is in recession. But he points out that the stock market typically bottoms around the midpoint of the downturn. By his reckoning, the economy entered recession toward the end of 2007, and the extensive valuation criteria he uses tell him there's now light at the end of the tunnel.

"The bottom has been made," Leuthold said. "The economy is going to start showing some positive signs sometime in the first half of 2009."

So he's getting in early, loading up on shares of biotechnology and alternative-energy companies in particular, and keeping a modest amount in oil drillers and natural gas producers.

Enthusiastic stock buying sets Leuthold apart, but it's in keeping with his iconoclastic ways.

"I guess I still am a contrarian," he said.

"He's definitely not your standard money-management personality," added Greg Carlson, a Morningstar fund analyst. "His approach is quite different from the norm. It's his willingness to be bearish that sets him apart."

More volatility seen with hurricane, payrolls

NEW YORK - Wall Street is set for another volatile week after the Labor Day holiday, as investors track the price of oil, key economic data and continued fallout from the credit crisis.

All eyes will be on Hurricane Gustav and its potential to disrupt U.S. Gulf Coast oil production and refining operations on its expected land-hit early in the week. Any new threat to oil production could boost the price of crude and in turn cause stock investors to sell shares on fears that inflation pressure will rise.

Investors will also contend with a barrage of economic data next week, notably the August payrolls report due out on Friday and two reports on U.S. factory activity from the Institute for Supply Management.

But the hurricane will be the main focus at the beginning of the week. On Friday, officials said the storm would build to a dangerous Category 3 hurricane when it hits land.

In the past week, oil prices have surged and retreated on concerns about the storm's path, strength and the readiness of U.S. emergency officials to handle any disruptions.

Crude oil hit $120 on Thursday before settling at $115 on Friday, bolstered by a stronger dollar.

Gustav "will probably be moving the market one way or the other," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey. "If it fizzles then it will be a big relief on oil prices."

Also driving the market next week are several government economic reports.

This data comes after the U.S. government said gross domestic product grew at a robust 3.3 percent clip between April and June, above initial estimates of 1.9 percent.

But analysts said the strong showing was largely the result of increased exports.

"If you look at GDP, you're led to believe the economy is solid," said Hugh Johnson, chief investment officer of Johnson Illington Advisor in Albany, New York. "But if you look at the variables -- employment, industrial production and personal income -- the economy does not look solid but weak."

On Friday, all three major indexes fell more than 1 percent and all 30 stocks in the Dow industrials finished in the red.

Economic data added to the market's jitters after a government report showed U.S. personal income fell unexpectedly in July while spending slowed as the effects of a government stimulus package wore off.

An inflation measure hit a 17-year high.

The Dow Jones industrial average closed down 171.47 points, or 1.46 percent, at 11,543.71. The Standard & Poor's 500 Index was down 17.93 points, or 1.38 percent, at 1,282.7. The Nasdaq Composite Index was down 44.12 points, or 1.83 percent, at 2,367.52.

For the month, though, the Dow added 1.5 percent, while the S&P rose 1.3 percent and the Nasdaq gained 1.8 percent.

The August jobs report from the Bureau of Labor Statistics, is also expected to be weak, with an overall decline in non-farm payrolls of 85,000 and no change in the unemployment rate of 5.7 percent for August.

In July, U.S. non-farm payrolls fell for a seventh straight.

Another month of hefty job losses would reinforce those who argue that the economy remains in poor shape, Johnson said.

Market watchers are also awaiting data on U.S. auto and same-store retail sales for clues about consumer spending in the upcoming holiday season, along with the Federal Reserve's Beige Book.

"The markets are extremely volatile and moving according to macroeconomic news quite a bit," said Prudential International Investments' Praveen. "All of this data has the potential to be moving markets."

Investors will also be tracking new developments among financial companies, particularly beleaguered mortgage giants Fannie Mae and Freddie Mac, and Lehman Brothers Holdings Inc, which is shopping its asset management division arm.

Lehman, the fourth-largest U.S. investment bank, is looking for buyers for some $40 billion of commercial mortgages and property on its balance sheet.

Although developments in the race for the White House will not take center stage, analysts said that Wall Street will be watching the Republican National Convention next week for long-term market implications.

Investors will particularly hone in on Sen. John McCain's tax and energy policy, especially following his selection of Alaska Gov. Sarah Palin as his running mate.

"The markets are not going to be happy with an Obama presidency...and McCain is not particularly loved by Wall Street either," said George Schwartz, president at Schwartz Investment Counsel in Bloomfield Hills, Michigan.

But with Palin, "conservatives are going to come out roaring in favor," Schwartz said. "It's going to be a positive influence on economic activity."

Schwartz added that the pairing could impact oil prices, especially if Palin and McCain say they strongly support off-shore drilling.

"That premise of additional supplies is going to further take the speculators out of the market and cause them to put downward pressure," he said.