The DJIA, S&P 500, and Nasdaq have now advanced between 25% for the Dow and 36% for the Nasdaq this year, and the question becomes what will drive them for the last quarter of the year. The logical answers are third quarter earnings and the most import ant data that measure the economy-especially unemployment and GDP.
Unfortunately for traders all the data may not point in done direction. Most analysts believe that earnings for the S&P 500 companies will outperform projections. GDP may not be as robust as expected, largely because joblessness is increasing. And, joblessness may be worse than expected because businesses are finding out that they can make do with the people that they have now, a fact that had led to a sharp improvement in productivity.
A muddle of data which confuses the economic picture may give the markets almost no clues about how the overall environment will look going into next year.
Data about the financial world was mixed in the third quarter. That did not prevent the markets from making impressive advances, which means that the fourth quarter may be a good one for investors whether there is a reason for it or not.
Douglas A. McIntyre
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