>>> US Close Dow -1,60% S&P -1,52% Nasdaq -1,56% Russell -1,67%

Closing Market Summary: Cyclical Sectors Pace Broad Retreat

The stock market ended the Tuesday session on the lows after spending the entire day in negative territory. The Russell 2000 led the way, sliding 1.7%, while the S&P 500 lost 1.5% with all ten sectors ending in the red.

Equity indices were pressured from the start with the early weakness being attributed to a disappointing Industrial Production report from Germany (-4.0%; expected -1.5%), which represented the largest drop in activity in almost six years. Growth concerns were also on the mind of IMF economists as the Fund lowered its 2015 global growth forecast to 3.8% from 4.0%.

Fittingly, the macroeconomic worries weighed on most cyclical sectors, while energy (-1.3%) tried to withstand the broad pressure. The sector, which lost 3.8% last week, displayed modest intraday strength, but slumped in the afternoon amid a noteworthy drop in crude prices (-1.7% to $88.81/bbl).

Elsewhere among cyclical sectors, the industrial space (-2.4%) spent the bulk of the day at the bottom of the leaderboard. Transports contributed to the weakness, but defense stocks did not fare much better as evidenced by a 2.1% decline in the PHLX Defense Index. As for transports, the Dow Jones Transportation Average lost 2.5% to widen this week's decline to 3.6%.

Other high-growth areas like chipmakers and biotechnology also struggled to keep up with the broader market. The PHLX Semiconductor Index lost 1.9% to extend its month-to-date decline to 5.1% with just five October sessions in the rear-view mirror.

For its part, the biotech group slumped at the open, halved its loss by midday, but returned to lows before the close. The iShares Nasdaq Biotechnology ETF (IBB 266.62, -5.10) lost 1.9%, while the health care sector (-1.6%) ended among the laggards.

Meanwhile, the remaining countercyclical sectors displayed slimmer losses than the broader market with utilities (-0.1%) registering the smallest decline.

Generally speaking, today's retreat reflected big picture concerns, thus putting corporate-specific developments on the backburner. To that latter point, Sodastream (SODA 21.52, -6.05) plunged 21.9% after guiding Q3 results well below analyst estimates. On a similar note, AGCO Corporation (AGCO 42.13, -4.97) sank 10.6% after priming the market for disappointing results.

The broad retreat fueled increased demand for volatility protection, sending the CBOE Volatility Index (VIX 17.21, +1.75) to its highest close since mid-March.

The safe-haven demand underpinned Treasuries with the 10-yr note (+21/32) spending the entire day in a steady rally. As a result, the benchmark yield fell eight basis points to 2.34%.

Today's participation was ahead of average with more than 770 million shares changing hands at the NYSE.

Economic data was limited to JOLTS and Consumer Credit:
  • The Job Openings and Labor Turnover Survey for August indicated job opening increased to 4.835 million from 4.605 million 
  • Consumer credit increased by $13.50 billion in August, down from a downwardly revised $21.60 billion (from $26.00 billion) in July, while the consensus expected an increase of $20.00 billion 
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while the minutes from the Sept 17 FOMC meeting will be released at 14:00 ET.
  • Nasdaq Composite +5.0% YTD 
  • S&P 500 +4.7% YTD 
  • Dow Jones Industrial Average +0.9% YTD 
  • Russell 2000 -7.5% YTD

>>> Fed's Kocherlakota: Declining unemployment level is not alone a reason to ra

Fed's Kocherlakota: Declining unemployment level is not alone a reason to raise rates, see no reason to remove 'considerable time period' from the Fed statement - remarks to reporters 
- Reason to raise rates would be to head off higher inflation and rising wages, neither of which are a concern right now
- Do not see financial stability concerns as a material concern at the moment 
- Would only want to raise rates if there were an expectation for inflation to increase to 2% within one or two year time period
- Impact of the stronger USD on the economy is very modest

(BFW) Fed’s Dudley: Mid-2015 Lift-off Is ‘Reasonable View to Me’

Fed’s Dudley: Mid-2015 Lift-off Is ‘Reasonable View to Me’
2014-10-07 19:00:00.18 GMT


By Vivien Lou Chen
Oct. 7 (Bloomberg) -- Lift-off in 2015 would be “something
to be very excited about,” would signal economy is healthier,
and “would be very good news even if it were to cause a bump or
two in financial markets,” NY Fed President William Dudley
said.
* Lift-off date will depend on economic data and outlook,
Dudley said in speech in Troy, N.Y.
* Consensus expectation for mid-2015 “seems like a
reasonable view to me”
* Timing could be moved earlier or later depending on
whether economy improves or disappoints
* Timing could be moved earlier or later depending on
whether economy improves or disappoints</li></ul>
* “It still is premature to begin to raise rates,” given
labor market slack and low inflation
* “Significant underutilization of labor market
resources” remains
* “Significant underutilization of labor market
resources” remains</li></ul>
* Forecasts for U.S. growth of ~3% in 2H and 2015 “seem quite
reasonable to me”
* Some headwinds have subsided; fiscal restraint is likely
to disappear next yr, while credit availability has
improved
* Some headwinds have subsided; fiscal restraint is likely
to disappear next yr, while credit availability has
improved</li></ul>
* “Some meaningful chance” that growth will be weaker or
stronger than forecast; “likelihood that growth will be
substantially stronger” than forecast “is probably
relatively low”
* Consumer spending isn’t as strong as one might expect,
households also have higher-than-normal levels of saving
* Stimulus from consumer durable goods cycle is likely to
weaken going forward, sales of light vehicles unlikely
to keep growing at rate of past few yrs
* Stimulus from consumer durable goods cycle is likely to
weaken going forward, sales of light vehicles unlikely
to keep growing at rate of past few yrs</li></ul>
* Stronger USD, due partly to increasing confidence in U.S.
growth prospects, limits upside risk to forecast
* Housing also has less upside risks than might be expected;
“nothing on the horizon” that would soon change low levels
of starts, mortgage constraints
* “Great deal of uncertainty” around future path of
unemployment
* Fed will monitor participation rate; rate “could” rise
again, yet less confident than before
* Fed will monitor participation rate; rate “could” rise
again, yet less confident than before</li></ul>
* CBO’s forecast for core PCE deflator rising to 1.9% by 4Q
2015 from 1.5% in 2Q of this yr is “quite reasonable”
* Risk is that inflation increases more slowly than
forecast; appreciating USD, weaker foreign growth
prospects could act to damp inflation pressure
* “Quite confident” expectations will remain well
anchored
* “Quite confident” expectations will remain well
anchored</li></ul>
* NOTE: Dudley is only Fed president with permanent vote on
policy, has never dissented on FOMC decision


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Vivien Lou Chen in San Francisco at +1-415-617-7078 or
vchen1@bloomberg.net
To contact the editors responsible for this story:
James Holloway at +1-212-617-4454 or
jholloway8@bloomberg.net
Greg Chang

>>> Lafarge/Holcim :Reportedly two construction materials indust

Reportedly two construction materials industry groups are looking at Lafarge-Holcim assets valued at up to €7B - press - Ireland's CRH and Mexico's Cemex said to plan a joint bid for the entire portfolio of assets that Lafarge-Holcim are being required to sell as a condition for approval of their planned merger. Germany's HeidelbergCement and Brazil's Votorantim Cimentos SA are also considering a joint bid for the assets. Several private equity groups are also considering bids

>>> AML : Carlos Slim: Bankers are working on a plan to split up America Movil -

Carlos Slim: Bankers are working on a plan to split up America Movil - TV interview 

***Reminder: Mexico telecom reforms are forcing America Movil to reduce its share in the market below 50%, from around 70% today. The company reportedly plans to separate Telcel's towers and renounces rights to acquire Dish Mexico control. Back in late August, America Movil reportedly hired Bank of America to advise in asset sales. AT&T and Softbank were said to be interested in acquring assets.

--> Could see spec. on European Names...After Spin off completed