Stock Market News for October 01, 2015

Encouraging jobs report and strong rebound in biotech stocks boosted benchmarks on the last trading of the third quarter, which turned out to be the worst quarterly performance in four years. Better-than-expected jobs data from ADP offset dismal manufacturing data in Chicago on Wednesday. The Nasdaq posted its highest one-day gains in three weeks. The Dow, S&P 500 and Nasdaq ended in negative territory for both third quarter and September. The Dow registered quarterly losses for the third straight quarter.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) jumped 1.5%, or 235.57 points, to close at 16,284.70. The Standard & Poor's 500 (S&P 500) surged 1.9% to close at 1,920.03. The tech-laden Nasdaq Composite Index closed at 4,620.16, gaining 2.3%. The fear-gauge CBOE Volatility Index (VIX) declined 8.7% to settle at 24.50. A total of around 8.52 billion shares were traded on Wednesday, higher than the last 20-sessions' average of 7.28 billion. Advancers outpaced declining stocks on the NYSE. For 74% stocks that advanced, 24% declined.

On Wednesday, Automatic Data Processing, Inc. ( ADP ) reported that privately-owned companies generated 200,000 jobs in September, higher than market expectations of 195,000. It was also higher than August's tally of 186,000. The gains were concentrated in the service sector, while manufacturing continued to struggle due to headwinds in the export markets and the weakness in the energy space.

The services sector added an aggregated 88,000 jobs in September while goods-producing industries added only 12,000. The construction industry had a very strong month, adding 35,000 positions, while manufacturing lost 15,000 jobs. Investors will remain focused on Friday's non-farm payroll report after this higher-than-anticipated ADP jobs data

However, MNI Indicators reported that the Chicago PMI declined from August's reading of 54.4 to 48.7 in September, indicating a contraction in manufacturing activity in Chicago as it decreased below 50. It was also significantly lower than the consensus estimate of 53. Slump in production growth and a drop in new orders were identified as main reasons behind the contraction.

Meanwhile, biotech stocks rebounded strongly on Wednesday. The iShares Nasdaq Biotechnology (IBB) jumped 4.8% yesterday. Key biotech stocks including Celgene Corporation ( CELG ), Amgen Inc. ( AMGN ), Gilead Sciences Inc. ( GILD ), Regeneron Pharmaceuticals, Inc. ( REGN ) and Biogen Inc. ( BIIB ) gained 2.7%, 3.4%, 2.3%, 3% and 4.9%, respectively.

Moreover, the Consumer Discretionary Select Sector SPDR (XLY) was the best performer among the S&P 500 sectors. The sector gained 2.7% yesterday. Key stocks from the sector including, Inc. ( AMZN ), The Walt Disney Company ( DIS ), The Home Depot, Inc. ( HD ), Comcast Corporation ( CMCSA ) and Starbucks Corporation ( SBUX ) rose 3.2%, 2.8%, 2.3%, 3.2% and 2%, respectively. All of the 10 S&P 500 sectors finished in the green on Wednesday.

Additionally, encouraging consumer sentiment data out of China also boosted investor sentiment yesterday. The Westpac MNI Consumer Sentiment Indicator - a gauge of consumer sentiment in China - increased from August's 116.5 to 118.2 in China, its highest reading since May 2014.

Separately, weak economic data from Japan and Eurozone fueled speculations that they may opt for further stimulus measures. Government data showed that industrial production in Japan decreased 0.5% in August, witnessing decline for the second consecutive month. Moreover, the European Union's statistics office Eurostat reported that consumer prices in Eurozone declined 0.1% in September from the year-ago period, its first drop in last six months.

Over the month, the Dow, S&P 500 and Nasdaq slumped 1.5%, 2.6% and 3.4%, respectively.

Weak Chinese economic data including dismal manufacturing data, disappointing trade data, lower-than-expected factory output and decline in industrial output dampened investor sentiment. Meanwhile, the Fed's decision to keep the key rates unchanged during the FOMC meeting this month also weighed on markets. Sluggish global economic growth, increase in volatility in financial markets and low inflation level held the Fed back from hiking rates.

Moreover, U.S. Democratic presidential candidate Hillary Clinton's comments to prevent "price gouging" for specialty drugs had a massive negative impact on biotech stocks in the latter half of the month. Continuing decline in crude had a negative impact on major benchmarks throughout the month

Meanwhile, better-than-expected second quarter GDP report indicated that the US economy is back on track after witnessing sluggish growth in the first quarter. According to "third estimate" released by the U.S. Department of Commerce, the economy grew at a pace of 3.9%, significantly higher than first quarter's sluggish growth rate of 0.6%. Meanwhile, positive economic data, which includes Consumer Confidence Index, homebuilder sentiment index and unemployment rate had a positive impact on investor sentiment.

However, several economic data including non-farm payroll numbers, existing home sales, retail sales and durable orders were discouraging. Moreover, weak global demand and oversupply concerns weighed on oil prices , which in turn had a negative impact on energy shares. Separately, Volkswagen's ( VLKAY ) alleged scandal related to vehicle emission tests and a massive decline in Caterpillar Inc.'s ( CAT ) shares following job cut announcement dented investor confidence.

For the quarter, the Dow, S&P 500 and Nasdaq slumped 7.6%, 6.9% and 7.4%, respectively. Though benchmarks started the third quarter on a positive note, they lost their steam as the quarter progressed.

Markets managed to register gains in July despite weak earnings and international growth concerns. China's equity markets underwent a significant downturn, heightening investor concerns. Strong earnings numbers were restricted to mostly the finance and retail sectors, as the overall weak earnings result had a negative impact on major benchmarks.

August was particularly painful month for the investors. While the Dow notched up its biggest monthly decline in more than five years, the S&P 500 and the Nasdaq registered their steepest monthly losses since May 2012. Concerns regarding weak Chinese economy, oil price slump and rate hike uncertainty dominated investor sentiment throughout the quarter. While multiple yuan devaluations and a massive rout in Chinese markets raised fears about the slowdown in global economy, it also raised the level of uncertainty about a rate hike. Meanwhile, the decline in oil prices dragged down energy shares throughout the quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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