Stocks closed lower yesterday across the board.

The market was impacted by two things: 1) the port strike (which we all knew was coming, but doesn't make it any less concerning), and 2) Iran's missile attack on Isreal.

Nobody knows yet if Iran's attack will be limited to the initial barrage. And nobody knows yet how Israel will respond. The White House called the nearly 200 missile attack a "significant escalation." In addition to that, Israel suffered what is believed to be a 'terrorist attack' when 2 shooters killed 8 people and wounded 7 others.

The port strike was telegraphed days ago to begin on Oct 1, after an impasse in negotiations. The strike affects approximately 36 ports on both the East and Gulf coasts. If the strike lasts for only a few days, the economic damage is expected to be limited. But if it drags on, it could be significant. Nobody knows how long it will last and what the impact will be.

Traders appeared to sell first and ask questions later.

But we could be in for a big relief rally if the best case scenarios unfold.

Even though news events can sometimes throw the markets off course, it's important to know that there are plenty of tailwinds at the market's back. Not the least of which is the seasonality of things which shows that Q4 is the best quarter for stocks.

In other news, yesterday's PMI Manufacturing Index came in at 47.3 vs. last month's 47.9 and estimates for 47.0.

The ISM Manufacturing Index came in at 47.2 vs. last month's 47.2 and views for 47.6.

Construction Spending was off -0.1% m/m vs. last month's -0.5% and the consensus for -0.3%. On a y/y basis it was up 4.1% vs. last month's 5.3% pace.

And the Job Openings and Labor Turnover Survey report (or JOLTS for short), showed there were 8.040 million job openings in August vs. July's 7.711M and estimates for 7.700M.

But the jobs report everybody is really waiting for is Friday's Employment Situation report by the Bureau of Labor Statistics (BLS). At the moment, the consensus is calling for 132,500 new jobs to have been created last month (125K in the private sector and 7.5K in the public), while the unemployment rate stays steady at 4.2%.

While inflation risks have receded, labor risks have increased.

A couple of months ago, a sharply lower than expected jobs report caused concern that the Fed may have waited too long to lower interest rates and it was taking a toll on employment. Fortunately, the numbers snapped back to more respectable levels in subsequent reports. But there's no denying the labor market has cooled. A softer, but strong labor market is fine. A rapidly declining labor market is not and risks the Fed's, so far, soft landing. So all eyes will be on Friday's jobs numbers.

Q4 got off to a rough start. But the odds for a strong finish are in the bulls favor. Same goes for the month of October.

Stocks typically perform well in October. The month has gotten a bad rap since some high profile crashes took place in October in the past, including the Panic of 1907, Black Tuesday in 1929, and Black Monday in 1987. But overall, October fares pretty well. And so does the quarter.

Let's see if the market can regroup today and begin its way back up.

See you tomorrow,