Friends
The Fed statement sent market participants into a tizzy. Here is a rundown in the change of wording in the FOMC statement. First, the economy has moved from “moderately better” to “solid”. Inflation is falling further below the Fed target while employment is getting closer to the target. Keeping rates low for a “considerable period” has changed to having “patience”, but the new twist is that the Fed has now added to the statement that they are monitoring “international developments”. Yes, I do believe the Fed desperately wants to begin the tightening process (raise the Fed Funds rate) this calendar year, and I still think they will this summer, if nothing else but for appearance sake only. But, adding the “international developments” aspect to their decision making process certainly gives them an out if they feel that they just can’t do it this year. If Europe blows up, for example, they can shift blame abroad.
Well, it seems that all this took its toll on the stock market. After trading in positive territory more than once during the session, stocks finally retreated in late afternoon trading. By the close, the Dow Jones Industrial Average was down 195 points to finish the day at 17,191. The S&P 500 was down 27 points to close at 2002. Gold was down $7 to trade at $1284 per ounce, while oil was clobbered again, down $1.98 to $44.31 per barrel WTI.
Unfortunately, stellar earnings by Apple and Boeing ended up being somewhat of an afterthought, as traders focused on falling interest rates, falling oil prices and subsequent falling stock prices. Let’s see if the bulls can rally the troops over the next couple of days. Remember, we get our first look at 4th quarter GDP on Friday. Analysts are looking for growth of about 3.2%. We’ll see.
Have a nice evening everyone.
