Stock prices testing new lows for this cycle
September was billed as a cruel month and the prophecy came to pass. October 1 was a great day for the markets as the Dow jumped 4.6 percent and the Nasdaq composite index gained a healthy 3.6 percent on the day. But this trend didn't continue.

The negatives are outweighing any potential positives in the market, causing prices to tumble more often than they rally. Uncertainty is the market's biggest foe. As long as war with Iraq remains at the forefront of investors' minds, negative market psychology will be entrenched. In addition, investors are also concerned about the ramifications of the longshoreman's strike on the West Coast. While the air freight industry might pick up steam in the short term, there is no question that air freight will entail higher costs. In this sluggish economic environment, it isn't likely that these higher costs can be passed along to consumers. This means that profit margins will narrow for many companies affected by the strike.

Holding pattern
After significant rallies over the past several weeks, the Treasury market was in a holding pattern. Prices and yields moved in a tight range, so that this week's yields were not all that different from the previous week. Economic indicators were often below expectations, which should have been friendly news for the bond market. However, how low can yields actually go? The war premium ensures that the Treasury market is a safe-haven investment these days. It is hard to believe that Treasury prices could continue to rally from current levels.