♪ this is "nightly business report" with sue herera andit bl griffeth. market selloff. stocks fall shaly the second straight day, marking a rocky two-day start for the quarter, testing investor confidence. tonight we'll try and answer some keyso questions. why the sden reversal, what might happen next, and where long-term investotort can find opity. > all that nd more tonight on "nightly business re rt" for thwednesday, october 2nd. >> good evening,veryone and welcome. the ugly start to october got even uglier. the stock market selloff intensified a second straight day making an historically volatile period for the market even more so. as concerns over economino growh rattled investors. the dow jones industrial average

some of the reasons are . familiar. but some are new. and we'll explore all of the tonight. but fir the closing numbers. the dow down 494 points to close just above 26,000. . the nasdaq off 123 and the s&p now today's losses add to yesteriny's de obviously. in the past two days the dow fts more than 8 behind points. bun analyst described it as a gut check for investo i. that may beas the but according toee spoke investment group, a bad start to october doesn't necessarily mean the month endshat way. a couple of examples. look at the second line e re, 1935 during the depths of the great impression, t market startedhe month lower but as you can see it finished higher. same thing the line belowhat in 2009 during the great recession, and by the way the market finished higr for the quarter in both of those years

as well. we'll see what happens. as f today's action, bob pisani starts us off from t new yo stoexchange. the dow plunged nearly 600 points at the lowest poi before eell off the level. today address drop all three average more than erasedhe september gains in the first two days of october.fa mous is infamsz for being scary and volatile during october. but during previs years the s&p has been flat back to october 1950.ma et grapingle with concerns of a recessi. following off theeak manufacturing data the dow held above 26,000. concerns were centered around growth again. cyclical namesll industrial names, bogey, cateratll, oil names bike chevron a transport stocks all weaker. bank under pressure because beyond yields continued to sink today. it boils down to what side of the recession debate you're on

for 2020.ak anufacturing isn't sending the economy down by itself but a weakonsumer might.su remember the cr is the glynn of global growth but not much sign of a consumer slowdowny yet. one early sign watch the consumertocks doing well, home depot be nic key mcdonald's alstrong. there are a little bit of cracks showing. starbucks has been weaker in the last month pu gen how big it is inhina maybehina that's understandable overall. now even defensive stocks like consumertaples down. names like coke and proctor and gamble and pepsi and general minimums and became we keally cl for examp. for "nightly busineeport,"ni bob pit the stock exchange. >> as we reported yesterday, as bob mentioned, part of the concern in the market is the decline in manufactiring ty. and a large part of that may be here is brian sullivan.industry. >> here is a look at shipments gas industry year over year.and

hiu can see not only have vichlts is the yellow line come down from a year ago, new orders, future vimts, the white line have fallen as well. in fact total vimts down 2.5% i gett 2.5% may not sound like of millions or billions of dollars in heavy equipment orders appear manacturing it does matter. now the slide has been going on a while. as o august manufacturing data to the energy industry down 9f of the pf 12 months a big part is the drop i drilling activity last year at this time there was 863 rigs drill for oil inhe united states. last week just 713. much that ha drop is from texas. in fact according to baker hues, drilling higgs rigs in texas fell by 111 from a year ago. each vig a wig heavy pipe-filled piece of mhinery using many

vendors from rig companies to generator quips, trucker sand haulers, you name it. i and here the most important thing on a macrolevel to rememberl in 2008 nd gas nearly ngle-handedly kept the american economy from falling to a worst recession or depression. for about two years energy was the only industry addin jobs. and each drilling rig represents make 75 to 100 workers directly and indirectly. if we keep seeing a slowdown in drilling we may see a slowdown on the big daddy of all economic numbers. that is thes monthly jobs repor. st something to tnkbout ndth manufacturing data, oilanuf gas, stocks down, but t t drilling activity a could be twking the national numbers lower as well. for "nightlbusiness report" brian sullivan. meanwhile, the u.s. finds itself inf another tar i tiff. but this one is not with china. late today the u.s. trade representative said it's going to impose tariffs on dollions of

ars of imports from the european union. the world trade organization authorized those tar earlier in the day after it ruled that the eu unfairly subsidizes aircraft giant air bus. kayla tausche has details. >> the u.s. wil place new taris on 7.5 billion-dollar in european goods beginning october 18th after winning a long running legal dispute at the world trade organization. aircraft will be charged a n 10% tariff wle agricultural alindustrial tariffs s a 25% tariff including items from scotch whiskey t sweaters and sweet b bcuits in addition to wi abcheese a olives. a statement from delta airlines saidlanes are pased well in advance and imposing tariffs. on aircraft u companies committed to will inflict serious harms on u.s. airlines, the millions of americans they employ and the traveling public. washington and brusselig have beening more than aecade over whether bogey orir bus

receives more more dpoft subsidies the o sides with the u.s. and says the eu has given the french competitor unfair leg up. because of that ruling the u.s officials beach the eu has no right to retaliateh even tho it prepared a list of tariffs on its own. the two meetings are planning a meeting on october 14th. but it's unclear whatncf anything the negotiations will yield. for nightly business report, kayla tausche in washington. the new tariffs come at a fragile time for the european economy and potentiallyeens the rift in the trump administration trade fight. villa m-is in brussels could this escalate further with thee pean response? >> that's a definite possibility. european commission officials telling meg mhis s no great surprise, more or less what thes expected and they do anticipate the u.s. will movehead with imposing stafrs as soon as possible. can become enforceable under wto

rules. and the possibility as that pointat the europeans will not seek to retaliate by the allowances they might get thewto,hat could be a similarom level of tariffsle left open to them but may not happen unt earlyrl nexty year. before then an indication from the european commission for trad cecilia malmstrom was they mit use previous old settled rulings from the wto giving them the ability to enforce tarif they didn't take in the past. they'd use the lounss again t try and show they were being firm. bruneau o le marry, the french finance minister this amp talking about this is an error that economic and politic willing if the u.s. seek sanctions and the commissioner cecilia mmalmst saying ner counterproductive and unhelpful. tonight. you for joining us >> what could it mean for the market this month and the rest of the ye?

joining us now alice levin is th strategist ateg bny melon thanks for joining us tonight. >> thanks for having meagain, bill squloo we have so many cross current going on right now. these trade wars, the e-nos with chin coming up. we got more reports on the economy, tomorrow'sservices, the jobs report on friday. do you expect more volatility, he asked naively. the world in the manufacturing slowdown which a you pointed out is theor reason the selloff over the last two days. and the big question out there is whether it has affected the service -- the service sector. and theau consume b the consumer i 70% of u.s. gdp. and services are likewise about 70% of thecomy. so the read that we get tomorrow, thursday morning, and friday morning, are going to have an outsized iortance compared tohe past in how the market is going tonterpret all

the data. so a good reap should h support markets. but if there is any weakness at tiall it will ce the story of a u.s. u.s slowdown. and fears of a recession. >> but to be clear you do not foresee a recession. and see still correct? >> our base case is that there is no recession in 20. that the u.s. consumeronoesn factontinue to drive the u.s. economy. and in fact drives the global a ing said that, we do see slowdown and wehe do see risks are rising from markets as wl he global economy. >> is this the reason the fed cut rates the last couple o timehi is the insurance policy that they were taking out? or do you foresee even more cuts down the road? >> the rson the fed cut rates twice already this year is for several reasons. the of which was that the u.s. monetary policy had much higher rates than the rest of the world. and that can be damaging to the s. economy if the u.s..eral

reserve is muc tiger than other central banks. we do think the fed will cut another 25 basis points by the end of the year, which is actually what the market is pricing in. so that would be a benig event for the market. t will do tnk that help the housing market for example. >> so what do you do as an investor as we enter this month of octor? do you anticipate it will be as it has been in the past in some case upside month or not. the data in the binning of the segment was really interesting becaus they show as u point out that october is historically a higher month after a few days of seoff. thiss a very interesting market. because it's market where macroeconomic events can really shap the direction of corporate earnings andarkets. and the truthte of the m is and is if there is a trade deal sometime in the next mon or two or signals there of, then the markets should move higher.

more talk and that there is st nottee any kind of conclusion to th trade fight with china we expect the marts move lower. we will see what happens this interesting month. icia levin with bny melon for joining us. >> two long-term market waters lay out the bull case for stocks and the bear ce. ♪ wall street is also>> tryin to figure out what if any impact

impeachment develop in washington are going to have on the mechanic. ylan mui has the latest on the ama in d.c. >> the bamgts over impeachment tensified today in washington. threatening the legislatived apg that was already a long shot. congressional committees received an urgentriefing this general of the state department. after secretary m s pomp yoep acknowledged he was on the july 25th phone call between of ukraine.rump and t leader in a letter, democrats threatened to subpoa the white use if it doesn't turn over documents by friday related to at call. house intelligence chairman adam schiff said failure toe produce information will be considerededvidence of justice.ion of >> we are proceeding deliberately. real sense of urgency here that amis work needs to get done. >> trump quickly out swinging calling on schiff to resign and blaming the

impeachment non-sense for and 401(k)s. the stock market he accused democrats of abandoning issues like druges pr and trade. >> we have to go back to building our country, because 99% of nancy pelosi's time is spent on this. she should worry about lowering the price of drugs which i've done. but it's hard to do without the help of congress. >> the speaker of the house has insisted that her party can both legislat and investigatesa she she wells movement on the usmca trade deal and the prescription drug prices. >> the president w saying if you question my actions i can't agree on any subject, then the ball is in his court. >> for "nighy business report," ylan new y in washington. the labor markett may still historically strong but it's showing signs of slowing something investors watch. private payro company adp said today the company added 135,000

jobs in it was slightly better than expected but last year at this time monthly job gains averaged more than 200,000. economis that the trade tensions which have pressured manufacturing could eventually start to take their toll on the labor market. and the latest car sales reports produced a mixed picture. the auto industry, general motorste rep third quarter sales up more than 6%. an indication the labor strikeo is yet taking a toll on the company. but ford sales were down 5% because of sof oess in the suve ma fiat chrysler sales basically flat. >> those mixed autoales and concerns, the u.s. economy is slowing is part of the reason for the recent mechani selloff. but will things get worse before they get bette or is the worst over? barry knapp joins us managing direct at iron sds sds macroeconomic. michael farr wit us. president of farr miller andsh gton. he says the bull market is

strong. gentlemen, well nice to have you with us. >> thank you. >> thank you. >> barry a rough start obviously but you think things could get worse. why?y? >> well, first of all, all growth is not created equal. so what actually matters significantly for corporate revenues and corporate earnings is -- it's not just the manufacturr.g secin it's the spending on capital equipment and how that affects the inflationary aspect or implications or iimpulse, you will, from growth. a year ago capital involvement was quite strong. revenues were strongnd earnings were strong. this year we've had a significantdeacceleration in that capital investment. part of the. econo part of the recessions have started this which. it wash.commonplace in th 50s for example or 2001 when we had a tech there is no bubble today. but trat deacceon in the

capital spending part of the economy has put significant downside pressure on earnings and revenues and can be traced back to the trade war through business confidence. way throu the economy.ll the the final piece is going to be the labor market. growth has already slowed as you noted, nosue. it's only growing a 1.3%. the labor force year on year vers 1.9 a year ago. >> okay. >> so we think there is moreo be seen in the numbe. and the market is not reflecting thateflefuy. at 2,800 or 2750 in the s&p that would be reasonably fairly reflected in my aview. right. >> michael there you are. i mean, manufacturing has ed. it may be contracting at this point.th the labor market is starting to slow here as well. why are you still bullish? >> bill, we're still, i believe in a secular bull market that's been going on ten cotions. and you know had a 6% correction during the month of may.

mid-july with to mid-august we had a 6.5% correction. alauto of the times you know, you hear folks wailing and nashineeth saying here is the bear market. the market has a cold. you have to pay tention. but i think that planning the funeral is a bit premature at this point. i called jim yur yell before i came on with you guys. yur yrl said i think the risk is being underinvested i called my friend jac berujian he said the pullbacks wil create a c buying oprtunity. jack purt pointed out and i grow, the fed is in easing mode. the fed is accommodating markets. you don't want to fight the fed. and i think when you look at the unemployment numbers you say well we're 3.7% unemployment. th means tt we're 93.6% employed. you're going to have a slowdown reaching full employment. be careful. this could go down tomorrow on the services number a littlece

more. but kbroefrl i think you have to be oppornistic look at what you own and don't call an end to this bull yet. >> quickly, bary, you nee the adage is don't fight the fed. the key question in your opinion can t e fed cutugh to keep us either out of recession or get the enomy turned around a little bit? >> no, the fed -- the fed is trying to cut to stabilize business confidence, get capital spendingrestarted. totallyto offset that.can what could offset that to be clear is a trade deal or some type of trade detante for tesur >> i'm not calling for ami catacl sell off here. but 1o 20% is in the card. when you look tout money to work i agree. down 10% at the level i cited i'd be a buyer. but not yet. >> very quickly, michael, what's going to take us higher in your view which sector do youike

best? >> i think you take a look still at the n earningsbers whe they come out. they continue to grow a bit.th k you see wage gains and the consumer remains the key. ctors i like continue to be the defensive shift wau from the high risk. the conmer staples, health care i continue to like. the banks hav gotten killeom at point you have to buy them. >> barry knapp with iron sds macroeconomics, michael farr with farr miller in washington. thank you both. >> thank you. >> td ameritrade and e-trade the latest to drop commissions and that's whereith he begin the market focus with both online brokerages saying they are liemting commissions for stock an etf trading the day after schwab's announcement shares of both wer off more than 3% in today's selloff. johnson and johnson settled lawsuits with two ohio counties foabout $20 million. allowing the company to avoid a federal trial in the state

against a group of health care remoted companies accused of being responsible forpi thed epidemic. j&j rose o 132 even. and home build are lennar toppen yst forecasts thanks to high are demand for homes. the company said new orders rose 9 prps compared to ao year ago and there are signs that the housing market continues to improve. the stock was up nearly 4% today is 57.82. delta says it sees third quarter revenue below the previous guidance because higher than forecast costsge employee increasing and maintenance. shares fell more than 5% to 54.35. acute brands whichs sells lighting products missed on sales. in part part due to the continued trade war ith china. the ceo called the overcome demand for lighting products sluggish because of tariffs. the stock dropped more than 11% to 114.97. comg up, theumber one rule for long-term investors

after a selloff likershis one. ♪ ♪ ♪ ♪ so the month of october has arrived. after two days the dow down roughly 800 points. short-term traders loverm this volatility.ut but what a long-term investors? what should they do with this. >> joining us with her thoughts me, bill. ingtonf gillman hillh what do you make of the volatility. >> i don't make anything of . blip.it's a

since over the past 10 years we had somethingike 65 different versionst of panic attks where the market moved u d andn and scared the daylights out of peep. i don't think this is any different. t think it's the beginning of something nefarious. >> as a long-term investor, jenny do you ignoreehe headl risk out there? or do you take a look at maybe >> i think you -- you're always looking for opportunity. and i have this goofy bumper stick ner hh office saying i creates opptunity.cause it but you always stand back look at the portfolio and iosay, hast done what i intended it to do?wr itt i need for? two years aigt. fi years ago ten years ago is it positioneddo that going forward? self if it's not maybe make changes. but don't make changes just because w wre down 5% over the last five days. make changes because it'slways a good time to think thoughtfully and maybe make a change. >> butere. i what i thauls think about.

when does long-term investment thinking become complacency? down5%? maybe you go down0% and say m a long-term investor oom i'm ride going out. >> i think -- okay sohi i think you can always ridt out. right andnd take a step back an had the market down 18% or so in 2013 and 16% in '11. i might be off a little. t we'veidden threw and the annualized return over the past ten yea if you can ride those out? if you ride the down 18%t%ith down 16 ou know wlau get yot analyzed return of% 13 which is solid. i'm saying that i don't have a crystal ball. so i wou never know exactly when to get in and when to t out. i'd rather ride tho out and be just be thoughtful and did ligent and know i'm positioned for anything coming my way. >> so given that -- as you manage money for clients and look at the market, is the

economic data a little bit more iportant overall than the day to day activit the market? >>che econoata is definitely more important than the day to day, for s e and more important than this each company we're invested is what ev the corporate and what's happening at the corporate level there and will that company ride out whatever storm comes your way. >>taving said t what do you like right now? >> good question. okay so that'ha loaded for me. i always like dividend stocks because i'm a dividend investo i like dividend stocks. but that's not a -- a little joking. i like stocks with high free cash flow some choose to pay back i dividend appear some buy back shshes or improve businesses. but i love things with the higi free cash flow yield and we manage twoon portfolioa dividend stock portfolio and one disciplined growth portfolio but the hurdle ish a h free cash flow yield. if the compa is pping out high free cash flow they can

skate through a 2008, 2009 i don't mean the share price but the business skate through. >> very goodod jenny harrington with gillman hill asset management. >> thank for having me. a look a final numbers on wiltz not pretty. the dow down 494 to close just nasdaq off 123 and the s&p 5 slid 52. that's "nightly business report" i'm sue herera thanks for joining u >> i'm bill griffeth. have asereat evening. you tomorrow. ♪

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