Third Quarter 2011

The Wall Street Journal outlines five factors impacting stock performance this month. They include:

1) The Economy
2) Earnings
3) The Federal Reserve
4) Europe
5) Politics

The third quarter saw a digression in growth for the U.S. economy as debt ceiling debates waged in Washington and the U.S. debt rating was downgraded. Increased unemployment rates and decreased hourly wages added further drag on the economic outlook for the fourth quarter.

Positive gains in corporate earnings resulting from the Federal Reserve's QE2 program were overcast by the debt ceiling debates and the U.S. debt rating downgrade. Corporatations will continue to benefit from the lower borrowing rates they experienced in the first half of the year but digression in U.S. economic growth is bound to push earnings expectations down.

The Federal Reserve's next move is likely to focus on long-term debt maturity holdings which will influence long-term debt market rates. Debt issues in Europe also continue to add risk to international exposure.

Wall Street Journal, September 6, 2011
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