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After The Close - Stocks began the day on a brief constructive note. However, at 10 AM (EDT) the market sold off sharply, after the release of another disappointing economic report. Nonetheless, the pullback turned out to be short lived, as the averages quickly reversed direction and moved into positive territory in the late morning. At the end of trading today, the Dow Jones Industrial Average was ahead 122 points; the S&P 500 Index was up 23 points; and the NASDAQ was higher by 87 points.

Market breadth was positive, as advancers were nicely ahead of decliners on the NYSE. All of the major market sectors pressed ahead, with solid gains in the technology and healthcare names, and more measured progress in the utility issues and the financial stocks.

As mentioned, there were a few disappointing economic news reports released this morning. Specifically, initial jobless claims came in at 219,000 for the week of September 28th, which was slightly higher than had been anticipated. Further, factory orders declined 0.1% in August, where a somewhat better showing was expected. However, investors became quite worried after the ISM Services Index registered a reading of 52.6 for the month of September, falling well short of the consensus forecast. This report in particular touched off fears of a broader economic slowdown. Elsewhere, news that the Administration has just placed tariffs on some European goods also hurt sentiment. Tomorrow we get a look at the employment situation in more detail, when the September jobs numbers come out an hour before the market opens.

In corporate news, shares of Pepsi Co. (PEP) moved up after the beverage maker delivered solid quarterly profits. Things did not go as well for Constellation Brands (STZ). That stock sank as investors had concerns about the company’s unprofitable investment in a marijuana enterprise. Soon, the third-quarter earnings season will commence, and we will be hearing from many companies. This may provide traders with a better sense of direction.

Technically, the stock market fell sharply earlier this week, but managed to find some support today. However, it appears that Wall Street is growing concerned and the road ahead may be volatile, especially given the lack of clarity in a number of key areas.  - 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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Before The Bell - Fears of a recession are growing and investors are beginning to feel the pain. Specifically, after a choppy September in which stocks went back and forth with no real direction, the equity market fell sharply on Tuesday to start the new month and quarter and pulled back even more significantly yesterday morning. To wit, one day after the Dow Jones Industrial Average had fallen by 344 points on those economic fears, the blue chip index tumbled another 500 points yesterday morning. Not only did the Dow tumble, but we saw the day start with sizable deficits in the S&P 500 Index and the NASDAQ. 

What brought on this selling was a dour report issued Tuesday morning by the Institute for Supply Management (ISM). Specifically, that group reported that the industrial sector had contracted in September, with its survey registering a reading of 47.8. That overall dip below 50.0, which represented the worst showing since June of 2009, has sent investors into a near panic the past two trading sessions. The weak manufacturing data, which included contractions in new orders, production, employment, prices, and backlogs now raise the stakes for today's issuance on non-manufacturing and tomorrow's data on employment.  

Regarding the market, the Dow limped into the lunch hour down more than 500 points, driving that composite down perilously close to the 26,000 mark at that time. Also, some big name technology stocks were taking a severe hit at mid-session. At noon yesterday, the selling had been so severe that the gains for the S&P 500 and the Dow for the third quarter had been wiped out. Meanwhile, trade talks between the United States and China were set to begin next week. Investors will need to see upbeat commentary from that get together to give the market a psychological lift.

Before such meetings, however, investors will want to see positive economic releases including one later today from the ISM on non-manufacturing. Expectations are that this sector will again expand, but at a lesser rate. Then, tomorrow, the Street will want to see a constructive report on non-farm payrolls. In August's survey, 130,000 jobs were added. Estimates are that 140,000 new positions were created in September. Any outcome worse than that could pose further problems for a market already worried about a recession, even if, as we believe, those worries still seem premature..    

The selloff would then continue as the afternoon got under way, with the Dow's loss approaching 600 points at the early afternoon nadir. As was the case on Tuesday, there was little in the way of any interim buying, with stock prices just meandering about into mid-afternoon with little change. True, the day's deficits were pared somewhat late in the session, but any attempted recovery never went all that far, and the key indexes all closed up shop within striking distance of the day's lows. As earlier in the day, investor concerns centered around worries about payrolls, the U.S.-China trade war, and weakening manufacturing.

In all, at the close, the Dow tumbled by 494 points, with all 11 sectors of the S&P 500 Index giving ground. That index, itself, fell 53 points. The NASDAQ, also weak, tumbled 123 points. One other worry, as noted above, was payrolls. That is because in addition to tomorrow's Labor Department release, Automatic Data Processing (ADP) released its private-sector payroll report, which showed that 135,000 positions were added last month; expectations had been for 142,000. That modest shortfall worried investors given the government report that is upcoming. However, these reports have not always correlated in the past.

Looking out to a new day now, we see that the major indexes were lower in Asia overnight, following the fireworks in New York yesterday, while in Europe, the leading bourses are showing little early change. In other markets, oil prices are off slightly; interest rates are down marginally; and the early read on the U.S. equity futures is for little aggregate movement at the start of trading.  - Harvey S. Katz, CFA

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