Stocks continued their slid Friday, closing out a month that started promising. On Friday, the DJIA fell 53.13, or 0.5 percent to 10,067.33. The S&P 500 index lost 10.66, or 1 percent, to 1,073.87, while the Nasdaq composite index declined 31.65, or 1.5 percent, to 2,147.35.

For January, the blue chips lost 3.5 percent, the S&P 500 is down 3.7 percent, while the Nasdaq is off 5.4 percent. It was the worst month on the street since February of last year. We all know the historic run up in equities beginning the following month. Are we in for a similar pattern in February of 2010?

Morning Outlook

It is the first day of February, and wow it definitely feels like it here in the northeast. On Wall Street, markets are trying to shake off their tough start to the new year with the fresh month. So far in premarket trading, Dow Jones industrial average futures are up 52, or 0.5 percent, at 10,069. Standard & Poor’s 500 index futures are up 5.60, or 0.5 percent, at 1,076.00, while Nasdaq 100 index futures are up 8.00, or 0.5 percent, at 1,747.25.

President Barack Obama projected in his budget for the fiscal year to September 30, 2011 the US budget deficit would soar to a fresh record of $1.56 trillion in 2010. The proposal released this morning includes the spending freeze on discretionary items and the repeal of the Bush tax cuts for families making over $250,000. Nothing new or surprising, however it underscores the need to look at Medicare, Social Security, and Defense to eliminate waste and improve efficiency and fraud.

Currencies and Commodities

The greenback took a pause after rallying to a 5 moth high against the euro. The dollar rose 0.0482% at 90.311 yen in the currency market. The euro appreciated 0.2692% to $1.39 while the pound dropped 0.6532% to $1.5882. Gold lost 50 $1.20 to $1082.60 an ounce, while silver climbed 0.34% at $16.24. Light, sweet crude for March delivery added 32 cents to $73.21 per barrel on the NYMEX; a 0.44% advance.

Economic Calendar

8:30 AM
Personal Income: the dollar value of income received from all sources by individuals. Consumer spending: Includes consumer purchases of durable and nondurable goods, and services.

The consensus increase in personal income for the month of December is 0.3%, while November saw an increase of 0.4% Consumer spending is expected to have risen 0.3% in the month, down slightly from November.

10:00 AM
The ISM Manufacturing Index: The Institute for Supply Management surveys more than 300 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. The index gives a great look at the state of manufacturing and the direction it is heading. The cyclical nature of manufacturing could signal further economic downturn, and also can send off serious inflationary pressures in the economy on a higher than expected number.

The consensus figure is 55 for the month of January, down from December’s reading of 55.9.

10:00 AM
Construction Spending: The report measures the value of new construction activity on residential, non-residential, and public projects, giving a great indication of the economy’s momentum. The consensus is for a drop of 0.5% in December after declining 0.6% in November. A lack of residential construction spending has hampered the reading, while nonresidential and public spending has been strong.