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September has not been a very happy month for stocks in the past. But we all want to put August's unusual turbulence behind us and look forward to something stable, if not necessarily exciting. The month-to-month peculiarities notwithstanding, we all know that at the end of the day the market's movements are reflecting developments in the broader economy.

And with some of the more dire recessionary fears easing, stocks have been gaining ground lately. But the economic picture remains unsettled as this morning's weak productivity and labor market data shows. A little later this morning, we will likely get a soft read from nation's manufacturing sector in the August ISM manufacturing report. Tomorrow we will get the all-important August non-farm payroll report.

Weekly Jobless Claims dropped by 12 thousand to 409 thousand. The prior-week's tally was revised upwards to 421 thousand from 417 thousand. The relatively more stable 4-week average increased by 1.8 thousand last week to 410 thousand.

The continued above-400 thousand read on the claims data is not reassuring, but it is difficult to get a good sense of the labor market through this series alone due to recent one-off events like the Verizon Communications ([url=http://www.zacks.com/stock/quote/vz]VZ[/url]) workers strike. A key measure of the labor market would be tomorrow's August non-farm payroll report. I would be very happy if we get a report along the lines of Wednesday's ADP report.

Aside from the claims report, all eyes will be on the August manufacturing ISM report today. The consensus expectation is for the index to drop below 50, which is the dividing line between an expanding and contracting manufacturing sector. As worrisome as the index's pullback below 50 is, it is hardly sure-shot evidence of an imminent recession.

The index has been losing ground since peaking in February at 61.4 and would need to fall below 42.5 to get into recessionary territory. Each recession in the past has been preceded by the index falling below the 50 level, but not every under-50 reading means that the economy is headed towards a recession. 

In corporate news, the U.S. Justice Department came out against the proposed merger between AT&T ([url=http://www.zacks.com/stock/quote/t]T[/url]) and T-Mobile USA on anti-trust grounds. Separately, the board of directors of BNY Mellon ([url=http://www.zacks.com/stock/quote/bk]BK[/url]), the nation's largest custody bank, ousted the company's CEO. According to unidentified people quoted by the Wall Street Journal, the CEO 'was viewed by some as difficult to work with.' On the earnings front, we got weaker-than-expected results from Coldwater Creek ([url=http://www.zacks.com/stock/quote/cwtr]CWTR[/url]) after the close on Wednesday.

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