The major indexes experienced modest losses on Monday despite a positive manufacturing index report, as investors focused more on uncertainty over European banking policy. On Tuesday the S&P 500 suffered its worst daily loss in three months after a Fed official stated that the recent QE3 bond-buying program would be ineffective at stimulating the economy. Sour sentiment also resulted from Caterpillar lowering its long-term profit growth outlook. On Wednesday stocks fell once again following a report that August new home sales fell against expectation. Thursday brought a break from the recent downturn, as the market rebounded markedly as positive economic news out of Spain and China lessened this week’s negative attitude among investors. The week, month, and quarter ended on Friday unceremoniously with another loss as investors fear that Spain’s credit rating might be downgraded to junk status.
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Stocks took a break from the recent run up on Monday, as investors used a decline in steel demand as an excuse to sell. A decline in crude oil prices also weighed down the energy component of the major indexes. On Tuesday the markets were largely unchanged as an increase in home builder’s confidence was offset by Fed Ex’s announcement to cut its full-year earnings outlook. Despite some good news on Wednesday – existing house sales rose in August, and Japan will implement a bond-buying program to stimulate its economy – stocks were once again largely unchanged. On Thursday the major indexes finished mixed, barely reacting to a US jobless claims report that showed a larger than expected increase in new jobless claims. The market finished the week on Friday with a small loss on very high volume.
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Stocks backed off their multi-year highs on Monday, with no substantial economic news either positive or negative. On Tuesday the Dow earned back its Monday’s loss as some investors began banking on the idea that the Fed would introduce additional quantitative easing in the near future. The markets inched up a bit on Wednesday, once again setting a five year high for the Dow. On Thursday, the long-awaited quantitative easing was announced, with the Fed pledging to buy $40 billion in mortgage-backed securities per month. Such an action is expected to drive investors out of bonds and back into stocks. Stocks responded to the move by moving up well over a percent. The major indexes finished the week on Friday by tacking on additional gains as euphoria from the quantitative easing was still present. Once again, the Dow set a multi-year high.
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Following the Labor Day holiday on Monday, a poor manufacturing report sent stocks to a modest loss on Tuesday. The major indexes changed very little on Wednesday, a bit surprising considering that bellwether FedEx lowered its earnings forecast and more dire news came out of the Eurozone. On Thursday the Dow soared by 244 points when the European Central Bank announced it will buy government bonds to allow struggling countries to issue new debt. The S&P 500 and NASDAQ set 4-year and 11-year highs, respectively. Stocks finished the week on Friday slightly higher despite a rather bleak August jobs report.
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