November Hits the Ground Running

US stock markets traders have some interesting challenges to deal with as we head into a new week, and the second last month of a year that seems to be passing faster than the speed of light. With mid-term election results due on Wednesday, speculation is high as to whether Republicans may take control of either one or both chambers of Congress – House of Representatives and the Senate – and if so, what that would mean to the pace of US economic recovery and the possible effect on markets. There are concerns that if the Republicans take the House and the Democrats retain control of the Senate, valuable time, energy and resources may be lost in needless confrontation. It is common knowledge that Wall Street is rooting for a Republican victory in the elections, with many investors hopeful that the change will be a boost to business and the market.

Along with mid-term elections, this week presents the Fed’s meeting, as well as the October jobs report from the US government, a key indicator of the progress of economic recovery, which is due on Friday. Minutes of the Federal Open Market Committee’s meeting are likely to be released on Wednesday, with expectations being that the Fed will launch another round of quantitative easing (being referred to as QE2) in an attempt to boost the pace of economic recovery. Positive market response to the mere announcement in August of the possibility of such a move by the Fed indicates that investors will be keenly interested in any announcement made by the Fed on Wednesday. Speculation as to the size of the stimulus package currently varies from between $500 billion to in the trillions of dollars.

Other highlights of the upcoming week include the October manufacturing index from the Institute for Supply Management on Monday. Tuesday sees mid-term elections taking place, as well as the release of BP’s third quarter results. Just after midday on Wednesday, the Federal Open Market Committee will make known its rate decision, with expectations being that interest rates will remain unchanged at between 0 percent and 0.25 percent. Also on Wednesday, the release of third quarter results from Time Warner, CVS Caremark, AOL and News Corp. Thursday brings with it the government’s weekly jobless claims report, as well as third quarter results from Sirius XM, DirecTV and Cablevision. The last day of the week sees the release of the pending home sales index by the National Association of Realtors and a report on consumer credit.