Market Snapshot August 31, 2009, 4:35PM EST

U.S. Stocks Finish Lower

Indexes ended an otherwise strong August on a down note Monday after China's benchmark index tumbled 6.7%

Story Tools

U.S. stocks closed lower Monday, with the selling on Wall Street trimming a sixth straight monthly gain for the S&P 500 index on the final day of August.

Weak oil and gold prices weighed on commodity issues and the broader market extended a sell-off that began overseas. Speculation that lending curbs in China would hamper growth in the world's third-largest economy sent stocks in Shanghai down 6.7% and led to further selling in Europe and the U.S.

Meanwhile, M&A activity and a rise in the Chicago PMI did little to inspire investors.

On Monday, the 30-stock Dow Jones industrial average finished lower by 47.92 points, or 0.50%, at 9,496.28. The broad Standard & Poor's 500-stock index was down 8.31 points, or 0.81%, at 1,020.62. The tech-heavy Nasdaq composite index lost 19.71 points, or 0.97%, to 2,009.06.

Treasuries were higher. The U.S. dollar index fell.

The rout in Shanghai was triggered by renewed worries banks will cut back on the lavish lending that spurred frenzied gains until earlier this month, reports the Associated Press. The benchmark Shanghai Composite Index lost 192.94 points Monday to 2,667.75, its lowest close in more than three months. The Shenzhen Composite Index of China's second, smaller exchange tumbled 7.2 percent to 904.14.

Investors began selling heavily last week on concerns that banks will cut back on the lavish lending that had helped push shares up more than 80% by early August. Bank lending in August declined further following July's sharp fall from the previous month, state media reports say.

Meanwhile, Japanese voters turned out the Liberal Democratic Party government on Sunday, breaking 54 years of almost unbroken one-party rule. In yesterday's elections, the opposition Democratic Party of Japan won 308 of the 480 seats in the Lower House of the Diet, Japan's parliament. The LDP won just 119 and for the first time since the party's founding in 1955 will not be the largest party. Turnout set a record high, with 69% of eligible voters participating.

The New York Times reports that many Japanese saw the vote as the final blow to the island nation's postwar order, which has been slowly unraveling since the economy collapsed in the early 1990s. In the powerful lower house, the opposition Democrats virtually swapped places with the governing Liberal Democratic Party, winning 308 of the 480 seats, a 175% increase that gives them control of the chamber, according to the national broadcaster NHK. The incumbents took just 119 seats, about a third of their previous total. The remaining seats were won by smaller parties.