Hopefully the first trading week of October isn’t any indication of things to come. Despite following the best quarter of the year, October is off to a rocky start. Once again, investors began fretting about interest rates and the general ‘blah’ state of the world economy. The combination only did one thing and that was boost volatility. Stocks this week spent much of their time declining as investors continued to question the health of the markets and the world.
The week’s economic data didn’t exactly help. Measures of labor conditions, manufacturing and consumer health released this week all seemed to trend lower than recent readings. That’s certainly throwing cold water on the continued bullish progress of the markets. The many mixed speeches by various Federal Reserve governors this week also didn’t help to calm fears. Interest rates may be rising, to aggravate the less than wonderful economic news.
At the same time, earnings have finally begun to trickle in. The blitz of earnings season is vastly approaching and the early – or, in some instances, late – companies’ reporting have been mixed as well. The pattern of beating on profits, missing on revenues and guidance continues to be a common theme for stocks.
In the end, it all proved too much to bear and the market’s trended lower on the week.
Mondays have been quite calm in recent weeks. However, as the start of a new quarter, this week’s Monday was quite busy. The real star of the show was the Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) report. The measure of factory activity actually rebounded last month, although not by a large percentage. Traders took that as a sign that the Fed will raise rates and as a result, investors sold stocks hard.