Only two sessions remain in this third quarter of 2007, prompting some market observers to comment that the indexes are now dominated by the window dressing activities of hedge funds and other large players, but that this could possibly set up a coming October downside reversal. One red flag is the consistently low volume output that has been a hallmark of the multi-week rally off the mid-August swing lows.

In economic news, the Commerce Department reported that durable goods orders for August came in much weaker than had been anticipated; in fact, the readings were the poorest seen in seven months, indicating a potentially widespread slowdown in the US industrial sector. More and more commentators are speaking of a softening economy; some are pointing to a coming recession.

What kept the market buoyant however – apart from the window dressing effect mentioned above – were positive developments between General Motors and the United Auto Workers union, which have now reached a tentative labor agreement, as well as news regarding Bear Stearns.

According to an article in the New York Times, Bear Stearns may be planning to sell a 20% stake to outside investors (among those named were Warren Buffett and the Bank of America, in addition to several other prominent entities). The Bear Stearns news prompted a sudden, late-day surge on the influential financial sector which sparked a noticeable, late-day jump on some of the major indexes.

Key economic data for the week starting September 24, 2007. Numbers shown are consensus estimates (market anticipates this value) and prior value.

Thursday:
	8:30 Real GDP 2nd quarter : 3.9% / 4.0% GDP Deflator: 2.7% / 2.7% 10:00 New Home Sales August: 830K / 870K

Friday:
	8:30 Personal Income August: 0.4% / 0.5%Personal Spending: 0.4% / 0.4% PCE Core Price Index: 0.1% / 0.1% 9:45 Chicago PMI September: 53.0 / 53.8 10:00 Michigan Sentiment September: 84.0 / 83.8

© HGH Associated Press

News Archive (from 7/1/2007 until 9/30/2007)