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After The Close - The stock market moved sharply lower this morning, managed to pare its losses somewhat in the afternoon, before retreating again at the end of the day. Lately, traders seemed to be concerned that the economy in the United States may be starting to falter. Sentiment has become less supportive, as some recently-released economic reports fell short of expectations. At the end of the session, the Dow Jones Industrial Average was down about 494 points; the broader S&P 500 Index was off 53 points; and the NASDAQ was lower by 123 points.

Market breadth was quite negative today, with decliners outpacing advancers by a roughly 3-to-1 margin on the NYSE. All of the major equity sectors lost ground during the session. There was notable weakness in the consumer goods stocks and in the basic materials issues. While still lower for the day, the utilities managed to hold up somewhat better than other market groups.

In economic news, the employment situation is moving back into the spotlight. Today, the Automatic Data Processing (ADP) employment change report showed that 135,000 private sector jobs were added to the economy during the month of September. However, analysts had been looking for a higher number. Meanwhile, tomorrow we will get a look at the jobless claims report for the week of September 21st, and on Friday the government will publish the monthly employment numbers. These issuances will be closely watched, as Wall Street looks for assurances that the economy is still in good shape. While some may be enthusiastic about the possibility of lower interest rates, signs of weakness forming at this point may be hard to shrug off.

In the corporate arena, it was a quiet day for profit reports. Nonetheless, shares of Paychex (PAYX) edged up after the payroll processer posted respectable quarterly results. Home-builder Lennar (LEN) also put out a good issuance, sending that stock up nicely. Looking ahead, the third quarter just concluded and in the coming weeks numerous companies will be posting their results and updating guidance. The quality of this earnings season will likely help determine the market direction for the remainder of the year.

Technically, the month of October has not gotten off to a good start. In addition to fears that the economy may be slowing, a divided political environment is not helping to calm investors.  - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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11:20 AM EDT - The fourth quarter began on a somber note for Wall Street, as stocks fell sharply yesterday and the selling has only picked up this morning. On point, after a dour reading on manufacturing activity was issued on Tuesday, in which that core sector put in its worst performance in more than a decade, the Dow Jones Industrial Average fell 344 points. Things are only getting worse so far today.

Specifically, on possible recession worries, the Dow is now off by 440 points, with that index, once threatening to establish an all-time record high, now in jeopardy of falling below 26,000. But it is not just the Dow that is plunging, but the S&P 500 Index (off 46 points) and the NASDAQ (down 121 points), as well. No sector is being spared, as the decline is broad based.

As noted, the major factor in the stock market's early October swoon is the disappointing manufacturing survey result issued yesterday, in which that sector showed a notable contraction. That weak showing raises worries that tomorrow's key survey on non-manufacturing activity also could disappoint.

Meanwhile, all eyes later in the week will be on the employment report that the Labor Department will release on Friday. Last month, the job creation tally was 130,000. Expectations for September are for the addition of 140,000 positions. Should there be a shortfall there, as well, the equity market could suffer further in this nervous setting.   - Harvey S. Katz, CFA

At the time of this article's writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - The often difficult month of September concluded on a high note, with a modest gain in the major equity averages on Monday, but the stock market began the frequently volatile month of October on an especially sour note. On point, the Dow Jones Industrial Average tumbled by 344 points yesterday, dragged down by a dour reading on manufacturing activity. Specifically, the Institute for Manufacturing Activity noted that its report on factory demand fell to its lowest level in a decade, landing deep into contraction territory.

As to the report, it stoked worries that the nation's economy may be faltering or even on the road to a recession. Interestingly, the market started the session, the first of the fourth quarter, to the upside, with the Dow surging by more than 100 points in the first few minutes of trading. Then, at 10:00 AM (EDT), the ISM reported that its index came in at a shockingly low 47.8 in September. A reading of 50.0 is the dividing line between an expanding industrial sector and one that is declining.

This reading was the lowest since June, 2009, when the economy was just starting to exit from the worst recession in a generation. Not only did the aggregate survey show a decrease, but several key components, including new orders, production, and employment, also declined. Now, after that depressing outcome, all eyes will be on tomorrow's report on non-manufacturing activity from the ISM. Then, on Friday, the Labor Department will issue its jobs report for September. That issuance will be very closely watched and obviously will be reacted upon.

Regarding the market, it completely fell out of bed as the ISM manufacturing activity report was released. In fact, as the morning ended, the Dow had fallen by more than 200 points. Things would then only get worse, as the afternoon began and continued, with the blue chip index tumbling by more than 300 points. Sizable deficits were also posted by the S&P 500 Index, the NASDAQ, and the small-cap Russell 2000 Composite. There would be no place to hide. And, unlike many past selloffs, there were few attempts to cut the losses.

This equity downturn would intensify into the close, with the indexes all closing near their respective lows on these economic worries. When the final bell had sounded, the Dow would finish down 344 points, or 1.28%; the S&P 500 would end off 36 points, or 1.23%; the NASDAQ would plunge 91 points, or 1.12%; and the Russell 2000 would be down 30 points, or 1.97%. Treasury note yields also would fall in a flight to quality among basset classes. Now, the focus will shift to tomorrow's ISM non-manufacturing report and Friday's jobs survey.

Looking out at a new day and following yesterday's fireworks, we see that the major indexes were lower in trading overnight in Asia. In Europe, the key bourses are posting early steep losses. Elsewhere, Treasury yields are off again; oil prices are little changed; and U.S. equity futures now are pointing to a weaker opening for the market when live trading begins this morning. – Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.