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ASX 200 down for third day straight

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down for the third consecutive day, bucking positive offshore data and gains as the nation approaches tomorrow’s national election.

Overnight, the Dow Jones realised a slight gain thanks to a series of positive economic reports, including a fall in applications for jobless benefits and news that 176,000 new private-sector jobs had been created in August, based on reports by Automatic Data Processing and Moody’s Analytics.

Whilst the above news fares well for the labor market’s recovery, it also increases the chances that the US Federal Reserve will begin to taper off its quantitative easing. This caused high yielding stocks to act as a drag on the market.

It is a similar story in Australia with each of the major banks today trading in the red – including a 0.55% loss for NAB (ASX: NAB) whilst mining majors BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) are down 0.75% and 0.55%, respectively. Meanwhile, telecommunications giant Telstra (ASX: TLS) is down 0.6% and Woolworths (ASX: WOW) is down 0.7%.

Whilst the market is reacting to foreign news, the looming election is also affecting the market’s run. Macquarie Private Wealth division director Martin Lakos said “The passing of the election this weekend is expected to help consumer and business confidence, as well as investor confidence, but that should be pretty well factored in by now, so some profit-taking is possible after strong gains in recent weeks.”

Since hitting 5207.7 points on Tuesday – its highest level in three months – the benchmark index has fallen 1.7% to 5123 points.

Foolish takeaway

Whilst the month of September started off strong, September and October are generally poor performing months for the stock market. Should that trend continue to play out this year, investors should be on the lookout for falls in shares of quality companies.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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