Beaten-up investors go into September, historically a weak month for stocks, facing key reports

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on jobs, manufacturing and services. If those disappoint, the S&P 500 could breach technical support levels, pushing stocks yet lower.

The S&P 500 index has fallen nearly 13 per cent since April as investors fret about the chance of a double-dip recession. But the index has found solid support around the 1,040 level with a sustained move below that proving tough.

Federal Reserve chairman Ben Bernanke boosted stocks on Friday by signalling the Fed is ready to act if the economy worsens. But more weakness in upcoming indicators like non-farm payrolls and Institute for Supply Management surveys would intensify fears the economy is sliding back into recession.

“There is this continual trend toward numbers falling short of expectations,” said Nick Kalivas, equity analyst at MF Global in Chicago. “My guess is you'll see some selling come in again next week on these numbers.”

The non-farm payroll report on Friday is expected to show 99,000 jobs were lost in August, swollen by redundancies among temporary census workers, while private sector hiring grew by only 42,000.

Both the manufacturing and services sectors are expected to have experienced another slowdown in growth in August. The ISM manufacturing report was released on Wednesday followed by the services sector report on Friday.

The S&P 500 tested the 1,040 level twice during the week, both times ending the day with gains. The level has consistently attracted buyers over the past 10 months and was significantly breached only once during a brief stint in July.

“Here we are sitting at this important support level, having pulled back 8 per cent (on an intra-day basis) in three weeks, you potentially set up for a reversal,” said Richard Ross, global technical strategist at Auerbach Grayson in New York.

The benchmark Standard & Poor's 500 index finished this week at 1,064 on Friday. If the 1,040 level is breached, the S&P 500 could fall into a lower range around 1,020 to 1,010. However, the index runs into resistance at its 14-day moving average at 1,076.65, providing only limited scope on the upside.