Closing Recap 4:10PM EST

Wednesday, October 1, 14
Index Up/Down % Last
DJ Industrials -238.39 1.40% 16,805
S&P 500 -26.14 1.33% 1,946
Nasdaq -71.30 1.59% 4,422
Russell 2000 -16.18 1.45% 1,085


Equity Market Recap
New monthVERY rocky startas Dow Industrials post another triple digit loss (three last week),
trading back under 17,000, while Russell 2000 Small Cap index underperforms, dropping more
than 1% (now 10% off record closing highs) as global fears weigh on markets (Ebola scares, Hong
Kong, Russia/Ukraine, as well as weaker economic reports out of Europe nightly). Todays
pullback wiped out Q2 gains for both the S&P and DJ Industrials; Materials and Industrials leading
the weakness, while Utilities lead; Transports fell over 2.5%; mixed economic data in U.S. also
hurt (ISM/Construction Spending missedADP jobs better); the Ebola worries plagued shares of
airlines, hotels, theme park names, and cruise lines today)
Emerging markets fall (Ibovespa -2.3%), in Asia, Japans Nikkei fell, but Hang Seng and Shanghai
closed (Hong Kong protests continue day 5 as numbers grow larger). Europe on brink of
recession with more poor PMI numbers overnight (ahead of ECB meeting tomorrow)

Economic Data
Private payrolls better; ADP reported its sixth month of job gains above 200,000, as private-
sector employers added 213K jobs in September up from 202K in August (and above ests. for
205K) data comes ahead of the Nonfarm payroll data on Friday (ests 217K)
Aug. Construction Spending fell a surprise (-0.8%) vs. est. rise of 0.5%, while July was revised to
1.2% from 1.8%; private construction fell
ISM Manufacturing Index for Sept falls to 56.6 from 59.0 ( and below est. 58.5); said Business
activity fell to 56.6 vs 59.0 in Aug, New orders fell to 60 from 66.7 last month and Employment
fell to 54.6 vs 58.1 last month; Prices paid rose to 59.5 from 58.0 in Aug
U.S. Sept. Markit Manufacturing PMI falls to 57.5 vs. flash reading 57.9; New Orders fall to 59.8
vs 60.5 in Aug., while employment rises


Commodities
Volatile moves in the energy space today, with WTI oil futures rising as much as 1.9% and Brent
up 1.5% by noonbut a heavy reversal into the close with WTI falling nearly 1% and taking out
yesterdays low prints, following the broader tape breaking the $91 level to downside (closing
at $90.73 17-month low); Brent at 27-month lows, down 50c to $94.17
Gold climbs $3.90 to end at $1,215.50 an ounce, but failed to gain any real traction despite
geopolitical fears abound and a weaker dollar earlier (which did rally back); silver also ended up

Currencies
The dollar index has been a straight ride up since July (DXY was below 80.0 then), climbing as
high as 86.177 today (still at 4-year highs), trading as low as 85.781, but ahead of ECB meeting
where we may see additional easing measures/dovish commentary from Draghi, dollar holding
strong; yen pares recent losses, but still trading above 109

Bond Market
Government bond prices rose, in a big way, with yields on the 10-year falling 8 bps to 2.41%,
with biggest gain in six weeks for Treasuries. The benchmark yield broke through its 50-day
moving average, helping extend the push lower (concern of Ebola in U.S., jobs data, and lower
German yields after weaker data)

Other Interesting tidbits
Activist investment firm Relational Investors is winding down its operations and will dissolve its
current funds by the end of next year as co-founder Ralph Whitworth battles a recurrence of his
throat cancer, according to the WSJ. Some of its top holdings came under pressure late day after
the headlines (as per last 13F filing 8/14 had stakes in MHR, MDLZ, CLH, BEAV, YUM, IR, WFM,
HPQ, PMCS, TKR, HOLX, NXPI, HES, BG and MTW) http://goo.gl/QXs3iy (Relational later
confirmed reports, to dissolve fund in FY15but said plans to launch new fund in 2015)


Macro Up/Down Last
WTI Crude -0.43 90.73
Brent -0.50 94.17
Gold 3.90 1,215.50
EUR/USD -0.0019 1.2612
JPY/USD -0.46 109.18
10-Year Note -0.117 2.393%


Sector News Breakdown
Consumer
Monthly auto sales data for September out; 1) Ford (F) Sept. U.S. light-vehicle sales down (-2.7%)
to 180,175 vs. est. (-2.4%) as Ford brand sales down 3.2%; 2) GM auto sales up 19.4% to 223,437
vs. est. 18%; 3) Chrysler Sept. U.S. sales climbed 19%, above est. 16%, with Chrysler brand up
14%; 4) Nissan Sept U.S. sales up 18.5% to 102,955 vehicles vs. est. up 17% (a Sept record); 5)
Volkswagen September U.S. sales down 18.6% to 25,996 units; 6) Toyota Sept. U.S. auto sales up
1.7%, vs. est. up 7.5%




Staples 2
nd
best sector today (but still down); protein stocks have been strong of late, TSN
upgraded to Outperform at Credit Suisse; GIS to eliminate 700 to 800 salaried jobs
Casinos and Gaming fell after Wells Fargo noted Macau-related stocks WYNN, LVS, MGM, MPEL
rose yesterday after Xinhua announced end of specific anti-corruption program in Chinasays
contacts confirm announcement referred to very specific program, not broader anti-corruption
Restaurants sector upgraded to Bullish from Cautious at Stifel saying final checks in Q3 showed
that the comparative sales of all types of restaurants were gaining momentum says fav names
CAKE, ZOES, TXRH; PNRA was upgraded to buy at Wunderlich; JACK been trading at 52-week
highs (few analysts been positive of late)
Story stocks; WAG and ESRX announced that its two nationally available 2015 Medicare drug
plans will offer a preferred retail pharmacy network including the drugstore chain; ANGI said it
was exploring strategic options, including a possible sale http://goo.gl/GVClUd

Energy
Energy stocks, which have generally been a source of funds to buy other sectors in recent
months, held up early after plunging yesterday following crude 3.5% drop Tuesday; shares of
heavily beaten names with modest losses but selling progressed as markets traded to worst
levels and reversal lower for oil
Solar stocks getting attention after VSLR IPO priced 20.6M shares at $16, and opened; but overall
group down with broader market FSLR, SPWR, SCTY
WPRT cut its forecast for FY14 revs; sees year revs $130M-$140M, down from $175M-$185M
(shares of CLNE and GTLS fell in reaction)
Utility stocks rise a 2
nd
day; ISI Group upgraded DYN & EXC to Buy and NRG to Strong Buy given
capacity pricing improvements (also raises targets on each); DYN also upgraded to buy at
Macquarie group getting lift from falling yields as well today; shares of DUK, D, ED, PCG higher;
also flight to safety play in utility plays
Tanker space; EPD buys 66% of Oiltanking unit (OILT) for approximately $4.41B; FRO to set up
VLCC Chartering to create larger fleet w/more flexibility; DRYS announced public offering of its
senior secured notes due 2017

Financials
GSE stocks fall (FNMA/FMCC) after shareholders lost their legal challenges to a change to the
mortgage giants 2008 bailouts that sent their profits to the U.S. Treasury
REIT movers; ARCP agreed to sell its Cole Capital private-capital management business to RCAP
for at least $700 million to focus on its single-tenant real estate business
Other movers; IBKR said Sept DARTs up 21% vs. 17% in Aug and customer accounts up 18%;
Custody bank estimates raised for BK and NTRS at Raymond James as rate increase nears;

Healthcare
Biotech stocks that have or working on Ebola treatment vaccines, rise after the Centers for
Disease Control and Prevention confirmed the first case of the Ebola virus on U.S. soil (shares of
TKMR, BCRX, SRPT, HEB, NNVC and NLNK as well); outside of that, biotech was better for sale,
with shares of large cap VRTX, CELG, BIIB, REGN lower as well as mids MDCO, SGEN
Other movers; JNJ declines on Bernstein downgrade; IDXX up as now expects drawdown of
distributor inventories will result in 1-time reduction in revs of $20M-$25M (less than expected);
ARDX positive results from Phase 2b clinical trial; MASI jumped on $466M verdict win vs. PHG


Industrials & Materials
DJ Transport Index was down over 2% - with all 20 components lower - led by airlines on Ebola
fears (DJ Transport record high 2 weeks ago at 8,676down 400 points since) group falls after
reports of confirmed Ebola case in U.S. in Texas, which is weighing on travel sentiment (DAL, LUV,
JBLU, AAL); but weakness as well in all segments; CAR weaker after comments yesterday that
fleet costs may be slightly higher than est.
Railcar stocks fall (TRN, GBX, ARII); note late yesterday, proposed federal rules to make hauling
crude oil by rail safer and avoid fiery wrecks would drive up costs and put the U.S. energy revival
at risk, the head of an oil industry trade group said Bloomberg
Aerospace & Defense; BA down(was worst performer in DJIA early); aircraft lessors also fall with
BA, with shares of AER and AYR down; 2% plus decliners in defense, with RTN, NOC, LMT lower
Metals & mining; CLF tgt range cut to $4-$7 at Wells Fargo (stock breaks $10); after peaking 2
weeks ago after better guidance in space, steel stocks have come down sharply with
commodities as a whole, led by X, AKS, NUE; industrial metals also lower
Other movers in industrial space; BWC said is evaluating the separation of the companys Power
Generation Business and Government & Nuclear Operations Business into two publicly traded
companies; AYI profit rises on sales growth (eps beat by 4c as revs rise), sending shares higher;
ASEI falls after seeing Q2 net loss, below consensus for Q2 EPS gain 21c; AZZ off on earnings

Technology, Media & Telecom
Internet movers; EBAY shares downgraded by at least 4 firms on valuation after spin-off news of
PayPal; High beta stocks among hardest hit this morning, with shares of Internet (FB, YELP, NFLX,
GOOGL, LNKD) pacing the declines
Semi movers; SWKS defended by two firms (Sterne/Craig Hallum) after stock fell as much as 7%
on no apparent news (underperformed other semis) semis down BRCM, ADI, MRVL
Hardware/software; ADSK falls, but recovers losses after hosting analyst day today










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