Stocks were quiet on Tuesday as the final week of August dragged on. European stocks slid after Spain’s GDP contracted by a larger amount expected by economists. In the US, Tropical storm Isaac disrupted offshore oil production and made landfall in Louisiana. Interestingly, Wednesday marked the 7 year anniversary of Hurricane Katrina. Charles Evans, President of the Chicago Federal Reserve Bank, said the central bank should “take action now,” and buy bonds for as long as it takes to help stimulate the ailing jobs market and the broader economy.

Stocks continued to consolidate their recent move with another quiet day on Wednesday. On average, the economic news in the US was positive. The Fed’s Beige Book said “economic activity continued to expand gradually in July and early August.” This helped alleviate pressure for QE 3 and bodes well for the fragile economic recovery. The beige book compiles economic conditions from the 12 Fed districts around the country. Q2 GDP was revised up to +1.7% which topped the initial reading of 1.5% and the Street’s estimate of 1.6%. The GDP Deflator was unchanged and showed a 1.6% increase. Finally, pending home sales for July rose by 2.4% which was better than the Street’s forecast for an “unchanged” reading and June’s negative reading of -1.4%.

Stocks fell on Thursday as fresh EU woes resurfaced and hopes dimmed that Bernanke would announce QE 3 at his annual meeting in Jackson Hole on Friday. The IMF said it sees a “major challenge” in implementing emergency measures for Greece. Separately, Slovak Prime Minister, Robert Fico, suggested there was a 50% chance of a euro area breakup which rattled investors. Economic data from the US was not exciting. The Labor Department said weekly initial jobless claims count totaled 374,000, which was a little higher than the average estimate for 370,000. Meanwhile, continuing claims, fell to 3.316 million from 3.321 million. A separate report showed that personal income rose by 0.3% in July, which matched estimates. Personal spending rose by 0.4%, which was lower than the expected reading of +0.5%. Core personal consumption expenditures were flat month-over-month which missed estimates for a gain of +0.1%. Stocks rallied on Friday even though Bernanke did not announce QE 3 but left the door open for more easing in the future. The “big” news that helped stocks rally came from Europe when Spain announced the creation of a “bad” bank and a rumor spread that Bundesbank President Jens Weidmann, one of the most vocal opponents to the much anticipated ECB bond-buying plan, might resign. Bernanke, as expected, did nothing and left the door open for more easing- if needed. On average, US economic data was mixed to slightly better than expected on Friday.