Painful September, Q3 Wrap With Fresh Uncertainty About Jobs, Fed Stance

There may be a collective “Amen” heard round the markets as we close the books on a Q3 that delivered the steepest declines for a number of the globe’s leading stock indexes in a number of years – Europe, for instance, is logging its worst quarter in four years.

Today’s improved sentiment started in Asia but gains looked vulnerable closer to the U.S. start.

September has marked a particularly rough patch for the S&P 500 (SPX). Only the week ending September 11 closed with weekly gains. Sellers this month were largely spurred on by China’s slowdown, global economic uncertainties, and questions surrounding the timing of the Federal Reserve’s expected interest rate hike. That’s uncertainty that the Fed itself has tried to clear up by stressing its confidence in the economy and its hopes to resume “normal” interest rate policy soon.

Sure, early gains are indicated today but deep losses to kick off this week could keep the SPX on track for its second-worst week of the year, second only to the week ending August 21, when this benchmark shed 5.8%.

Bulls will want to see a solid challenge of SPX 2021 for a potential sign that bigger gains are in reach. Crude oil futures are also likely to remain in focus both for their impact on inflation expectations and on heavily-weighted energy shares. The U.S.-traded lead crude contract’s ability to hold $45 a barrel could prove an important indicator for the next near-term move in oil markets.

Budget Patch. The Senate and the House are today expected to pass a short-term spending bill that will extend federal funding until December 11 and avoid a government shutdown by tonight's midnight deadline. The fight over funding Planned Parenthood remained one of the major sticking points. Now, attention turns to longer-running debt ceiling issues. Read more of our coverage.

Private Hiring. The U.S. private sector added 200,000 jobs in September, according to payroll processor ADP. Street economists were expecting an increase of about 190,000 vs. a revised 186,000 gain in August. Some economists use ADP's data to get an early reading on Friday’s typically closely watched Labor Department hiring report. Today’s ADP reading is largely in line with Street expectations for a 200,000 payrolls gain in Friday’s release. Fed chief Janet Yellen offers a speech later Wednesday that may offer more clarity on the rate panel’s tough decisions for October and December.

Dollar, Fuel Prove Costly for Costco. Costco Wholesale Corporation COST shares could be in play today and seem to reflect two of the bigger economic stories: weak energy prices and a strong U.S. dollar. COST cited lower fuel prices and the stronger U.S. dollar in driving weaker quarterly sales, even as profit improved 10% over the year-ago comparable quarter. The membership warehouse club said comparable sales declined 1% for the 16 weeks ended August 30, the second consecutive quarterly decline in the key metric for retailers.

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