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This Week's Market Review

It was a down week on Wall Street as the Fed Announcement on Wednesday had little impact on the markets. As expected, the Fed left interest rates unchanged at 5 1/4% as well as their associated policy statement. Although their statement made it clear that inflation risks remain, the conclusion is that the Fed is done raising interest rates and they will begin an easing cycle in 2007. Other important news for the week included the Philadelphia Fed showing a drop of 0.4 for September, down from an 18.4 gain in August. A reading below zero indicates contraction and may be a sign that the manufacturing sector is in a decline. Another surprise was the 0.4% drop in the August core PPI, causing the yield on the 10-year note to drop to 4.73%. On the corporate front, Yahoo issued a profit warning for the third quarter on reduced ad revenue while Target said September same store sales were on track for the high end of their forecast around 5%. Going forward, a concern exists that we may be entering a period of economic weakness, although earnings growth continues to remain positive with expectations for the S&P 500 to report a 14% gain in operating earnings for the third quarter.

The DOW closed the week down, losing 52.67 points to close at 11508.10. The S&P fell 0.4%, dropping 5.09 points, ending the week at 1314.78. The NASDAQ lost 0.7%, shedding 16.66 points, ending the week at 2218.93.