During the past three months, the stock market has turned in one of its stronges t performances in U.S.

history. Since early June, the Dow Jones Industrial Avera ge has gained 12%. If this rate of increase continued, it would offer close to a 50% annualized gain.[1] But of course, such expectations are entirely unrealist ic. While we are grateful for market gains when we can notch them, we must ackno wledge that healthy markets move up and down. In keeping with this behavior, markets closed slightly down last week as investo rs weighed promises by the Fed and other central banks against signs of economic hurdles and political challenges ahead. The S&P closed 0.38% lower, the Dow los t 0.1%, and the Nasdaq trimmed 0.13%.[2] Federal Reserve officials made the rounds last week, giving speeches and express ing support for the Chairman s efforts to stimulate the economy. Some comments lead analysts to believe that the Fed will act on its strong mandate and take further action if necessary; however, most believe it will leave policies unchanged unt il the end of the year. While investors cheered the recent aggressive Fed action s, some believe the move indicates the U.S. recovery is still uncertain at best. [3] As we near the end of the third quarter, we will begin to see the first corporat e earnings reports. Profit warnings from companies in the S&P 500 are outpacing positive pre-announcements by the largest margin in 11 years, indicating that bu sinesses are still feeling the economic crunch.[4] Because companies have been c utting earnings estimates for months already, there is a possibility that weak e arnings could trigger a decline in stock prices. Even so, equities could heat up in the first week of October due to market-moving events like the release of un employment data, the presidential debate, and the Eurozone finance meeting. As the elections near, politicians are ramping up the rhetoric, but still failin g to deal with the fiscal cliff, a huge issue in the minds of analysts and inves tors. Although we wish that legislators would get their priorities straight and do their jobs, it is unlikely that any major resolution will be reached until af ter the elections. Should you have any questions about how the fiscal cliff or a ny other issue could affect your personal financial picture, please contact us. We are always happy to provide guidance.