Week 35: Which Way From Here?

September 2, 2011 – Thirty-Five weeks have passed for the year and this week the markets were almost flat as most investors were wrapping up their summer vacations and the news in the markets was very light.   As we are in to the second half of the year, it is apparent that those who were calling for a recovery in the second half are on shaky ground.  

 This week the Federal Reserve debated the best way to revive the economy: a clear sign that past actions have yet to create the results that those on the Bank’s Board desired.   The struggle on the Bank’s board of what is the best thing to do is also occurring on Wall Street.  The idea of a double-dip recession was pretty much discounted by those in the market; however, as further evidence of the economy slowing down surfaces this argument is gaining steam.  With the market flat for the week, it appears that neither argument has swayed the majority of investors.  Only time will tell who was right. 

 But just for fun, here is a sampling of  people that felt that there would be no double dip recession: President Obama, Paul Krugman, Ben Bernanke, and Warren Buffet.   It will be interesting to see if they are correct; however, as the front page of the September 2nd issue of Barron’s illustrated, there is a real tug-of-war between bulls and bears to which way the market is heading.   With such a lack of conviction, one can could expect that the volatility could increase as any news story could sway the markets on way for the other. 

Week 35 Market Data              
               
    Market Close                    % Change  
  12/31/2010 8/26/2011 9/2/2011   Weekly YTD  
               
DJIA 11,577.51 11,284.54 11,240.26   -0.4% -2.9%  
S&P 500 1,257.87 1,176.80 1,173.97   -0.2% -6.7%  
NASDAQ 2,652.87 2,479.85 2,480.33   0.0% -6.5%  
Crude Oil ($ per barrel) 91.4       - -  
               
               
Sources: Thomson Reuters; WSJ Market Data Group