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Waiting For (Mid) September

August 28, 2012

As the summer comes to an end, many investors are wondering what the rest of the year will bring. 

-Scott Wren, senior equity strategist, Wells Fargo

 

Last week's S&P 500 index: -0.5%

 

As the summer comes to an end, many investors are wondering what the rest of the year will bring. Most are anxious and more than a bit nervous. Others have been lulled to sleep by low stock trading volumes and a lack of any meaningful market movement in recent weeks. But before we get too far ahead of ourselves, we need to think about what lies ahead over the next four weeks. There are several important events that will occur next month. Some involve the state of the domestic or international economy while others are more political in nature. But rest assured, depending on the outcome, these events have the potential to rile the U.S. stock market.

Early in the month, we will be paying close attention to the ECB (European Central Bank) monetary policy meeting on September 6th. Then, on Friday, September 7th, the U.S. Bureau of Labor Statistics (BLS) will release the employment report covering August. The market is anticipating that the ECB will be in the market buying the sovereign debt of Spain and Italy in the near future. Investors are looking for further hints as to the timing and are hoping that something will be announced beyond just a cut in the overnight lending rate.

The next day, the BLS will release the August employment data. Investors are not anticipating a positive surprise. In fact, many are expecting some deterioration in the labor environment in the near term. While we would argue that in most recoveries monthly U.S. labor data is the most critical economic news investors hear, events in Europe this September will most likely have a bigger effect on the markets.

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