Stocks Poised to Fall

Wall Street finished another uninspiring session on the downswing Wednesday afternoon. The NASDAQ (0.33 percent, 7.57 points) and S&P 500 (0.30 percent, 3.27 points) finished down for the day, while the Dow Jones climbed just 0.05 percent (4.92 points).

Analysts with CNNMoney.com predicted another rough day of trading today, beginning with a pull back at the opening bell. A major factor contributing to the mixed results yesterday and today were comments in the Federal Reserve Bank’s policy statement from Wednesday. The Fed expressed concerns about the ongoing viability of the recovery, and worry about potential stagnation if it acted to raise lending rates.

Lending rates are low under the auspice that low rates encourage growth, but we have maintained low rates for so long that it is no longer encouraging anything. Making matters worse, the low lending rates are actually responsible for the inflationary pressure that has so many investors and economists worried about the safety of the American economy.

According to Bloomberg News, the ongoing worry about stagnation and a return to decline has many in Europe worried as well. The world’s most developed economies – the United States and the members of the European Union – have had great difficulty reacting to nearly three years of slow or declining growth. When the G-20 meets next week in Toronto some members will try to organize new proposals to speed a recovery that is already behind schedule.

However, according to Bloomberg, German Chancellor Angela Merkel is much more interested in protecting against decline than spending for growth. Germany’s export-driven economy has been their primary strength during this downturn. Her government would much rather focus its attention on exporting more, with less attention toward boosting spending privately or publicly.

Lastly, according to Reuters, the ongoing environmental tragedy in the Gulf of Mexico has claimed another victim; the President’s polling numbers. Americans are increasingly unhappy with the way BP is being treated (with kid gloves), with the way the spill cleanup is being run, and with the lack of progress after two full months. With the tropical storm season now underway there is increasing fear among Americans that the storms will throw the oil onto the coasts and imped cleanup efforts for weeks at a time. As a result overall Approval of President Obama stands at just 45 percent, while disapproval stands at an all-time high of 48 percent.