LCG London Cap

By Saumya Vaishampayan 

U.S. stocks limped into October, following the worst quarter for benchmark indexes since 2011.

The Dow Jones Industrial Average slipped 12.69 points, or 0.1%, to 16272.01.

Stocks drifted around, but remained in negative territory for most of the session, as traders pointed to uncertainty about the strength of Friday's employment report and what it will mean for the path of U.S. interest rates.

The S&P 500 added 3.79 points, or 0.2%, to 1923.82 and the Nasdaq Composite rose 6.92 points, or 0.15%, to 4627.08.

Back-and-forth action this week has left the Dow industrials and S&P 500 with slight losses.

"The rallies, at least in the last several weeks, haven't had any real follow through," said Ryan Larson, head of U.S. equity trading for RBC Global Asset Management. "That's been troublesome," he said, adding that it suggests investors remain cautious.

Stocks fell around the globe in the third quarter, driven by renewed fears of slowing growth in China and uncertainty over the U.S. Federal Reserve's plan to raise interest rates. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite suffered their worst quarterly percentage losses in four years.

The coming earnings season may not provide much relief for stocks, investors say, as companies continue to grapple with a global economic slowdown. J.P. Morgan Chase on Thursday cut its estimate for third-quarter U.S. economic growth to 1.5% from 2%. Additionally, the stronger dollar could weigh on profits for multinational companies, while a decline in oil prices from a year ago is likely to drag on earnings in the energy sector.

"There's enough uncertainty out there that people want to wait and see" before buying stocks, said David Kelly, chief global strategist for J.P. Morgan Asset Management.

Analysts expect a fall in S&P 500 earnings for the third quarter, on the heels of a decline in second-quarter profits. If the third-quarter earnings pullback materializes, it would mark the first time since 2009 that earnings fell for two straight quarters, according to FactSet.

Ralph Bassett, head of North American equities at Aberdeen Asset Management, said he has been more cautious recently about buying stocks that have fallen, given the uncertain outlook for earnings.

"Do you really want to continue to add on weakness given the lack of visibility?" he said. "Typically, it's our nature to add on weakness, but you need to have conviction that it's going to work out over the medium term," he added.

Economic reports in the U.S. were mixed Thursday, including a weak manufacturing reading and employment data that remained broadly consistent with an improving labor market.

Friday's U.S. jobs report will be closely watched by Fed officials as they decide when to raise short-term interest rates. Economists expect 200,000 jobs were created in September and estimate that the unemployment rate held at 5.1%.

The Fed's decision to hold rates at record lows in September helped fuel fears about slowing global growth. Since then, some of the central bank's officials have said they expect to raise rates later this year, including Jeffrey Lacker and John Williams on Thursday.

Mr. Kelly of J.P. Morgan Asset Management said he expects the central bank to act in December, which could pave the way for a year-end rally.

Elsewhere, China's official manufacturing purchasing managers index ticked up to 49.8 in September from 49.7 in August, pointing to a contraction in the sector. A private gauge of nationwide manufacturing activity, the Caixin China manufacturing PMI, was down slightly at 47.2 in September, a six-year low, compared with 47.3 in August.

"Investors are well aware of the impending economic slowdown," said Jeremy Batstone-Carr, chief economist and strategist at London-based brokerage and wealth manager Charles Stanley. Still, he is not calling for a rebound in global stocks just yet. "I'd be concerned about sounding the all clear, particularly as we head into the reporting season," he said.

The Stoxx Europe 600 ended 0.4% lower.

Asian markets were broadly higher, including a 1.9% advance in Japan's Nikkei. Markets in China and Hong Kong were closed for national holidays.

In commodity markets, U.S. crude-oil futures slipped 0.8% to $44.74 a barrel. Gold lost 0.1% to $1,114.20 an ounce.

The yield on the 10-year Treasury fell to 2.042% from 2.061% on Wednesday. Yields fall as prices rise.

In corporate news, McCormick & Co. said profit fell in its latest quarter, in part due to the slide of the Mexican peso and weak results in its India business. Shares fell 4.3%.

ConAgra Foods Inc. said it would cut about 1,500 jobs and relocate its headquarters as part of a restructuring plan. Shares rose 1%.

Tommy Stubbington contributed to this article.

Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com

(END) Dow Jones Newswires

October 01, 2015 16:41 ET (20:41 GMT)

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