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By Jason Stipp and Jeremy Glaser | 10-01-2015 12:00 AM

Friday Five: Market Pain, Little Gain for Bargain-Hunters

The third quarter's sell-off didn't create countless bargains, but we do see select opportunities in health care and elsewhere. Plus, sizing up the iPhone launch, and more.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five, Morningstar's take on five stories in the market this week.

Joining me with The Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Glaser: You're welcome, Jason.

Stipp: We just ended a bad quarter for stocks. Stocks had their worst quarter in four years. How should investors reflect on the last three months?

Glaser: A lot of investors are probably happy to see the third quarter in the rearview mirror. Most major indexes were down around 7%, and I think there is a lot building up to this … it barely was a correction … but to this downturn.

You look at some of the pressures building in terms of valuations. In many areas of the market, things were looking quite stretched when it comes to that metric. All of a sudden, the market decided that China was a much bigger worry than it had been before. That was precipitated by the devaluation of the Chinese currency, which got investors very worried all of a sudden. Of course, everyone was also watching the Fed. It seemed like no matter what the Fed did, it was bad news for the market. If they decided to raise rates, people were afraid that was going to have a negative impact on asset prices. But if they didn't raise rates, which obviously they didn't, that was a sign the economy was too weak for a rate increase, and that was a sign of concern as well.

You put all these factors together, and maybe we shouldn't be totally shocked that we finally saw a pretty major sell-off--as you mentioned, the worst that we've seen in four years.

But even after the sell-off, it's not like the market as a whole looks incredibly cheap right now. We're basically still in fairly valued territory. Some more pockets of opportunity have opened up for sure. We'll talk about some of those pockets during the rest of the segment, but it definitely has not created a new huge opportunity. Investors are still going to have to be vigilant and ready to deal with volatility in the quarters to come.

Stipp: Alcoa announced this week that it's splitting itself in two. What is the rationale behind that move, and what does it mean for investors?

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