Stocks: New Source of Economic Uncertainty

The Associated Press is reporting that the four-week dip in stock prices may be doing much worse than simply shaking investors. The recent volatility could mean more than justa reflection of uncertainty in other economic fundamentals; it could also impact the economy itself as companies and businesses react to the roller coaster market.

"I'm nervous that fear will lead companies to stop hiring and people to stop spending," investment strategist Jim Paulsen tells the AP.  

Examples that the market could be impacting the economy include a sagging home sales report from last week, which indicates many new buyers got cold feet at the very end—suggesting poor stock performance could have ended deals. Along with bad economic news out of Europe and manufacturing on a downturn in the States, bad markets are increasingly part of the larger economic indicators that influence confidence—or lack thereof—in consumers.

Investors are anxiously looking towards a new housing sales report on Tuesday, an unemployment report on Thursday, and a larger government report on economic growth at the end of the week. Those reports along with a speech from Federal Reserve Chairman Ben Bernanke could either give the markets a reason to surge or tumble.