Market Preview: Searching for a Catalyst

Updated from 6:12 p.m. ET to include information about Sears leaving the S&P 500.

NEW YORK (TheStreet) -- Stocks are still searching for a catalyst, and it's starting to look more and more like Federal Reserve Chairman Ben Bernanke won't cooperate with a big old wink to QE3 come Friday.

"Investors will likely be disappointed if they hope to hear something substantive come from Chairman Bernanke's comments from the Jackson Hole Symposium," wrote Sam Stovall, chief equity strategist at S&P Capital IQ after Wednesday's close. "We think QE3 will likely be announced following the mid-September FOMC meeting - if at all - since U.S. economic data continue to come in either slightly better than expected or show an improvement over the initial reading, such as this week's increase in the S&P/Case-Shiller Home Price Index, upward revision to Q2 GDP and improving tone of the Fed's Beige Book."

The view of John Higgins, senior markets economist at Capital Economics, is that QE3 won't do much for stocks anyway. He left his year-end 2012 forecast for the S&P 500 at 1350 on Wednesday while also keeping his 2013 view at 1400, meaning he sees a whole lot of nothing happening through the end of the next year.

"While the launch of a third round of asset purchases by the Fed could conceivably whet investors' appetite for risk, other factors could dull it," Higgins said. "Foremost among these is a break-up of the euro-zone, which we still think could begin before the year is out. What's more, the underlying yield on 10-year TIPS [Treasury Inflation-Protected Securities] is now significantly negative, at around -0.7%."

Higgins also highlighted the current slowdown in earnings growth, which makes for a much different market environment than when the Fed previously embarked on massive asset purchase programs, and said the central bank's tools for stimulating the economy haven't got the job done so far so it's difficult to believe more is going be better at this point.

"The failure of the economy to recover strongly in recent years has cast doubt on the healing properties of unconventional monetary stimulus," he said. "Skepticism has usurped optimism ... the consensus GDP forecast for next year is currently only around 2.4% - lower than the year-ahead GDP forecast that prevailed when Bernanke hinted at QE2 two years ago."

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