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Summer Rally Chills; Could Investors Be Awaiting QE3?

August 27, 2012

Stocks took a breather from their summer rally, as the S&P 500 suffered its first weekly loss in six weeks, falling 0.47% to close at 1,411.13.

-John Bonnell, assistant vice president, Fixed Income Investments

  • Last week, the S&P 500 suffered its first weekly loss in six weeks with U.S. Treasury bonds dropping and gold rising.
  • Speculation continues to increase that the Fed will announce another round of quantitative easing possibly as soon as the Jackson Hole conference over Labor Day weekend or the Sept. 13 FOMC meeting. The USAA team remains skeptical that QE3 would have much of a market or economic impact.
  • The recent economic releases continue to validate that the economy is slowing. Durable-goods orders and the Chicago Fed National Activity Index were both weak. However, housing is looking to be a bright spot as new home sales rose in July and the Federal Housing Finance Agency home price index rose for the fifth consecutive month.

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