Stocks see first monthly losses since February with weekly losses heavy as well. On Friday, the Dow (^DJI) gave up 249.85, or 2.51 percent, to a level of 9,712.73. The S&P 500 (^SPX) fell 29.92 points, or 2.81 percent, to 1,036.19. The Nasdaq (^IXIC) lost 52.44 points, or 2.50 percent, to 2,045.11. Volume was heavy on the session with the NYSE trading 1.65 billion shares and the Naz turning over 2.62 billion shares. Market breadth was negative on the session by a 4-to-27 and 5-to-22 margin on the Big Board and Naz respectively.

Third quarter earnings season got off to a good start, but traders have since decided to take profit. After rising for seven straight months, the major market indices suffered losses in October. The Dow did manage a flat month, but the SPX fell 1.98 percent with the Naz down 3.64 percent. This past week definitely went the bears way with the Dow off 2.60 percent; the SPX down 4.02 percent; and the Naz losing 5.08 percent.

On Thursday, stocks rallied sharply following a better than expected GDP reading for the third quarter. Friday saw the release of several economic reports, mostly better than expected, but traders still took profits heading into the weekend. Financials saw large losses with Bank of America (BAC) and JP Morgan (JPM) the biggest losers on the Dow.

Reports that Citigroup (C) may need to take another $10 billion in write-downs hurt the financial sector. Citi shares fell 5.1 percent with BAC off 7.31 percent and JPM losing 5.82 percent. Overall, the Financial Select Sector SPDR (XLF) gave up 4.68 percent to 14.05.

Consumer sentiment for October came in at 70.6 as measured by the Reuter’s/University of Michigan survey. This was better than expectations for a reading of 70.0, but down from September’s figure of 73.5. Though sentiment has come off its lows, consumers remained concerned about the jobs market. The Chicago PMI was also better than expected, rising to 54.2 in October from 46.1 in September. However, the employment component fell 5-tenths to 38.3. Next week traders will get two key reports with the ISM Mfg. Survey and Employment Situation report both on tap.

Oil stocks fell Friday thanks to falling crude prices and declines for Chevron (CVX) following its earnings release. Crude gave up almost four percent on the session to settle at $76.96, following the lead of the stock market. The commodity was also hurt by a stronger dollar against the euro. Shares of CVX fell 1.18 percent to $76.54 after the oil giant reported a 51 percent drop in profits. This news followed a disappointing earnings report from ExxonMobil (XOM) on Thursday.

Earnings will remain heavy next week, but the focus of traders will be on economic news. Besides the employment report, the FOMC will meet to discuss the economy and monetary policy. A rate change is not expected, but what the committee has to say about the state of the economy could have a major impact on stock prices.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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