Sunday, October 31, 2010
Stock market may turn more volatile
Early in November, the stock market may begin to reflect three major changes in the US economy that some are referring to as a "triple-play": 1) the Federal Reserve is meeting, 2) the mid-term elections on November 2, and 3) the release of the October jobs report. The Federal Reserve meeting will play a role in the volatility of the stock market by shedding light on the amount of money the FED will use for 'quantitative easing'. This method of stimulating the economy has the potential to be larger than the stimulus introduced by the Obama Administration in early 2009. Second, the mid-term elections on November 2 are being watched closely by many Wall-Street representatives because the Republicans are expected to make major gains. And, thirdly, the release of the October jobs market will serve as an indicator to Wall-Street whether the second 'stimulus' by the FED was needed.
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Right now, it is very difficult to forecast what direction the stock market is headed due to these three huge factors. Some of these factors are expected to play a beneficial role with the desired outcome, but other factors also appear as though they can be traumatic to the stock market. Quantitative easing by the Fed can be looked at optimistically in the sense that it will stimulate spending, which is what we need. On the other hand, there is no telling if the amount provided will be enough or if the economy would be better off recovering naturally without the stimulus.
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