Equities managed a one-percent advance this past week despite a disappointing jobs number for September and a downward revision for August. Earlier in the week, the Institute for Supply Management’s manufacturing index fell to 50.2 from 51.1 in August; below expectations and the lowest reading since May, 2013. The major indexes swooned on Friday after the employment report, but was able to finish with a strong reversal for the day with a 3% swing from the opening low to the closing bell. During the week, most sectors were in the green, led by a 3% advance in energy companies, as oil prices remained stable. Investors were glad to close the books on the third quarter as U.S. stocks suffered their worst quarterly decline in four years. In the three months ended September 30, the Dow Industrials shed 7.58% or 1,335 points and the S&P 500 gave up nearly 7%. The NASDAQ was off by about 6% for the quarter. Again, the Fed is caught between waffling figures both here and abroad and the rate quandary continues, with a 50-50 chance of a hike by year-end, down from pundits’ predictions of 70% just a few weeks ago. Treasuries rallied on the prospect, sending the yield on the 10-year note to 2.1%. The uncertainty is elevating volatility and ignoring some of the basic fundamentals that drive stocks: Sales and profits. The third quarter earning’s season kicks off on Thursday with results from Alcoa and the next few weeks will be extremely active as companies weigh in on their outcomes for the period and views for the remainder of the year and next. It is expected that the S&P 500 companies will report declines in earnings of 4%-5%, especially energy related, consumer staples, utilities and industrials. The question is: How much of the negativity is already priced in? The stock market continues to move about in fits and starts, with short-term periods of buying often followed by bouts of selling; making even seasoned investors restless. However, short of any disastrous earnings reports, valuations are becoming more reasonable. In the meantime, enjoy the playoffs.
Here is the answer to last week’s trivia question: The initials for security firm ADT originally stood for? Advance Detection Technology; Automatic Discovery Transfer; Addison, Dixon and Turkoff; or American District Telegraph. Answer: American District Telegraph. Founded in 1874, and before it made a name for itself in security systems, the company began as a telegraph system along with early pioneers Western Union, American Telegraph Co. (AT&T) and International Telephone and Telegraph Co. (ITT).
Today’s Trivia Question: Which company is the largest provider of mutual funds, based on assets under management? Vanguard; Black Rock; Fidelity; or State Street Global Advisors.