Market Wrap-Up for October 2: The Week in Review

This week marked the end of September. And for many investors, this was a month and quarter they’d like to forget. The past three months were the worst for the stock market since 2011.

Driving those negative returns and volatility this week was a host of dour consumer, manufacturing, housing and wage data. The few bright spots were overshadowed by other concerns stemming from our global neighbors, China and the European Union. Additionally, concerns in the health care sector, based on drug increases, again stepped into the forefront as Congress asked for documents from several biotech firms. That pushed the sector, and the tech-heavy NASDAQ, down.

All of this negativity was boosted by poor guidance estimates from several major stocks reporting earnings this week.

Investors should have taken a long weekend as Monday kicked off the negativity and volatility with a bang. Commodity prices tumbled as manufacturing data in China came in at lower-than-expected numbers. That in turn pounded basic material stocks and other China-centric sectors. Health care stocks also fell hard as Congress and Presidential candidate Hillary Clinton began to outline plans to rescue biotech profits via price gouging on drugs.

All of this was met with mixed consumer data. Personal spending rose by an expected 0.3%. However, personal income, which is a predictor of future activity, sank 0.3%, meaning consumers have less money to spend going forward.

At the end of the day, the Dow Jones Industrial Average dropped 312.78 points to finish at 16,001.89. Meanwhile, the S&P 500 fell 49.57 points and the NASDAQ sank 142.53 points due to the decline in biotech stocks.

• Cal-Maine Foods (CALM ) laid a big fat goose egg on its latest earnings report. The egg producer and chicken farmer managed to miss analyst estimates by 17 cents. CALM reported EPS of $2.97 and yields 2.22%.

• Unfortunately for Vail Resorts, Inc. (MTN ) the bump in personal spending didn’t help its bottom line. The ski resort owner/operator reported a loss of $1.92 per share. That loss was worse than what analysts expected. MTN pays a 2.4% dividend.

Investors took a chance to do some bargain shopping Tuesday after the previous day’s huge loss. The Dow Jones Industrial Average climbed 47.24 to 16,049.13 while the S&P 500 added 2.32 to end at 1,884.09. At one point intraday, the Dow was up nearly 118 points.

However, the rout in biotech stocks and health care-related equities continued. This caused the NASDAQ to drop 26 points.

Part of the newfound enthusiasm for non-health care sectors came from better-than-expected consumer confidence numbers. The Conference Board’s metric of how households are doing came in at 103. That was more than the previously reported number and higher than the 96.2 that analysts had been expecting.

• The industrial slowdown seemed to hit AZZ Inc. (AZZ ). The producer of various galvanized steel infrastructure products reported earnings of 67 cents per share. That was 1 cent less than estimates. AZZ yields 1.3%.

• It must be true that Costco Wholesale (COST ) is fanatical. The warehouse club operator reported another earnings beat. COST reported EPS of $1.73, 11 cents higher than estimates. Costco yields 1.1%.

• Master limited partnership Ferrellgas Partners, L.P. (FGP ) also reported earnings on Tuesday. However, there was no gas in the distributor of propane’s report. FGP missed expectations by a whopping 42 cents and reported a much greater loss. FGP yields 10.1%.

Wednesday was all about jobs via ADP’s Non-Farm Employment Change report. The payroll processor’s metric of the estimated change in the number of employed people during the previous month jumped by 200,000. That was well above estimates and the previously reported number. The metric is an early glance at other employment data released later this week, and the bullish report could indicate that job growth is surging.

The markets liked what they saw. The Dow Jones Industrial Average rallied 235.57 points to close at 16,284.70. The S&P 500 gained 1.9% while the NASDAQ finally snapped its multiday losing streak and rose 2.3%.

• Wednesday also saw data from another payroll processor and HR outsourcer. Paychex, Inc. (PAYX ) reported a 7-cent earnings beat and recorded EPS of 58 cents per share. PAYX yields 3.5%.

Much of the last two days’ worth of enthusiasm was shot on Thursday. Both unemployment claims and manufacturing data came in less than stellar. The Department of Labor’s report showed that there were 277,000 new unemployed individuals. That metric was higher than expected and much higher than the previously reported numbers.

Secondly, the Institute for Supply Management’s PMI/Manufacturing Index came in less than expected as well. PMI readings hit 50.2. That amount is hovering just above levels showing contraction in manufacturing activity.

As a result, the markets barely budged. The Dow Jones Industrial Average dropped a meager 12.69 points to close at 16,272.01. The S&P and NASDAQ did manage to finish in the green, albeit only slightly. The indexes gained 3.79 points and 6.92 points, respectively.

• McCormick & Company’s (MKC ) earnings report needed some seasoning. The consumer products maker reported profits of just 85 cents per share. That was 2 cents less than analyst estimates. MKC yields 1.92%.

This Friday will be all about jobs again as there is a trio of jobs–related data to be released. Hourly wage data, non-farm employment change and the unemployment rate will all be reported before the bell. All the data points are expected to be slightly bullish, with the unemployment rate holding steady and fewer unemployed individuals.

However, the markets don’t know what to expect from data going into the weekend. Premarket trading has all the indexes up slightly, indicating that things still have a chance to go sour.

There are no dividend-related earnings to report.

The third quarter will be full swing as investors try to forget the losses that occurred over the last three months. And they might just get that break next week. There isn’t much data to report next week, although some of it is quite important (non-manufacturing PMI, Fed minutes).

With the third quarter started, earnings season is once again in full swing. We’ll see reports from a diverse range of divided payers such as Alcoa (AA ), PepsiCo (PEP ) and Monsanto (MON ).