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With the Fed out of the way, investors could get back to business and start worrying about how the economy is doing, instead of pending rate hikes. The end of the month, and the end of the third quarter, meant there was a lot going on, which meant that much more to worry about. The sheer amount of economic metrics released this week created some volatility; though, it worked in investors favor.
Among the positive points were measures of labor, consumer confidence and overall GDP health. However, there were poor spots as well. The variability of the data continued to confuse investors, but the continued flow of easy money from the Fed generally made for positive gains.
Also adding to the jumpiness of the week were earnings. Earnings season hasn’t yet officially opened for the third quarter, but there were several early reporters. These bellwethers managed to shake things up, as current earnings were good, but guidance was poor.
The week’s data, however, highlighted some potential weaknesses and hiccups on the horizon.
Monday should have been an easy day, since the only data released was new home sales. The metric managed to beat estimates, but was lower than the previous high reading. However, spillover from international trading hit the markets hard. Investors woke to concerns about European and Japanese bank liquidity. Investors fled to safety as it appeared that some of Europe’s largest banks may not be able to pay for various fines with the U.S. Justice Department and could require a bailout. Investors also fretted about the presidential debate held that evening.