Most major stock market indexes continued their ascent in early October as the bullishness that started at the end of September continued.

You would think that with the price of crude oil reaching near an all time high price of fifty dollars per barrel the last day of September  that the stock market would have declined significantly in the first few trading days of October, but it didn't. However, the bears did regain the upper-hand again in the second week of October, as most major stock market indexes went into a free-fall once again.

The Wall Street pundits rationalized the precipitous decline of most stocks on the uncertainty of the presidential election in early November.

As the political polls began to show President George Bush losing steam against his rival Senator John Kerry, many stocks  continued to slide downward.
Most major stock market in

dexes did regain their footing as October came to an end at about the same level as they started the month.

The bond market remained range bound throughout October. Bond investors ignored the actions of the Federal Reserve (Fed) at their previous three meetings starting in June of this year, when they started their assault on short-term interest rates raising them at each meeting.

June of this year was the first time since the middle of 2000  that the Fed had raised short-term interest rates at any of their regular scheduled meetings.

The War in Iraq continued to escalate in October, but both stock and bond market investors seemed to ignore the daily carnage, as the shootings and suicide bombings continued daily with no let up in sight.


On November 3rd, President George Bush was re-elected to

the presidency of the United States, removing the uncertainty of the outcome of the election from the minds  of investors.

With the election behind them, the bulls regained their hold on the stock market in early November. Most stock market investors were unfazed when the Fed again raised short-term interest rates by 1/4 % at their regularly scheduled meeting in early November.

More bewildering, was that the bond market continued to trade in a narrow range throughout November, with yields near historic lows, even though the Fed had raised short-term interest rates four times since June to pre-empt the rising inflation in the U. S. economy.

Bond investors abhor inflation as
it erodes the value of their interest payments over time.