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After making strong gains this month, the market will likely close the quarter on a weak note today. Investors’ earlier optimism in the run-up to the Fed’s QE3 announcement and fresh measures by the European Central Bank seem to be waning lately. It appears that investor are starting to realize that the problems facing the U.S. economy run beyond the Fed’s purview and the Euro-zone issue is far from resolved.

It makes perfect sense for investors to be skeptical about the sustainability of the market’s recent gains given the economy’s soft run and the uncertain corporate earnings outlook ahead of the third quarter reporting season.

This morning’s lackluster Personal Income & Outlays report for August shows that the weak consumer spending trend that we saw in the second quarter GDP report (revised lower on Thursday) has continued in the current quarter as well. For the economy’s growth momentum to improve in the current quarter and beyond, consumer spending needs to rise from the second quarter’s pace of 1.5%. But that will be possible only if the labor market starts showing sustainable signs of improvement.

We will get a good picture of the labor market from the September non-farm payroll numbers coming out next Friday. But even though the Fed is on the case now, few expect a material turnaround on the labor market front anytime soon.

On the earnings front, Nike (NKE - Analyst Report) missed expectations after the close on Thursday, with rising expenses and the Chinese slowdown as the primary culprits. Also reporting after the close on Thursday was Research In Motion , the maker of BlackBerry, which beat top- and bottom-line expectations. It will be interesting to see if the after-hour boost the stock experienced on Thursday will show up in today’s trading action. But more significant than the stock’s one-day performance is the long-term outlook for this once-dominant franchise in the current environment of Apple (AAPL - Analyst Report) dominance.

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