Are These Political Factors Disturbing the Market?

Stock Market

U.S. markets might have a rough week ahead, considering the uncertainty surrounding a Senate vote on a military strike in Syria and the Federal Reserve’s upcoming policy meeting, September 17-18, during which the central bank’s policy-setting committee is expected to announce the easing of its $85-billion-per-month bond-buying program.

Congress is set to vote, likely this week, on a military strike against President Bashar al-Assad’s government for an alleged chemical weapons attack against Syrian civilians that killed an estimated 1,400 people, intelligence officers told Reuters. One fear associated with U.S. involvement is the likelihood of a prolonged conflict — Syria has been embroiled in a civil war that numerous press reports indicate could continue for years.

“The market will be very susceptible to rumor,” Quincy Krosby, a market strategist at Prudential Financial in Newark, New Jersey, said to Reuters. ”The worry is that a surgical strike suddenly changes and becomes a bigger, wider event.”

Back in Washington, in addition to the possible tapering of bond purchases — which Reuters says have been supporting asset prices in the past year — more central bank uncertainties abound. Federal Reserve Chairman Ben Bernanke is set to step down early next year, and the federal budget/debt ceiling negotiations between the White House and Congress also have investors nervous.

U.S. equity markets have remained steady so far this month despite the news. The S&P 500 rose 1.4 percent the first week in September after falling 3.1 percent in August, the Nasdaq Composite was up almost 2 percent, and the Dow Jones Industrial Average saw a gain of 0.76 percent.