Thursday, May 01, 2008
No More Cuts?
Economic data was mostly good Wednesday and the Fed cut rates, yet stocks end with losses on the session. The Dow fell 11.81 points to close the session at 12,820.13. The SPX lost 5.35 points, closing at 1,385.59.
The Fed decided to cut interest rates by 0.25% as expected, yet traders were not in the buying mood. The Fed took the view that risks are mostly balanced between inflation and economic slowing, which leaves the odds of a further rate hike low....but not unlikely.
The Fed got good news on the inflation and economic growth front this morning in the form of the first quarter GDP report and employment costs. GDP rose 0.6 percent during the quarter, double expectations even while the GDP price index up just 2.6 percent quarter on quarter, 4-tenths below estimates. Employment costs rose 0.7 percent in the first quarter, a tenth below expectations with the year on year growth rate at 3.3 percent. Even the ADP employment report was better than expected, showing a gain of 10,000 jobs.
Now the Fed meeting is over, the focus will turn to the jobs report on Friday. Most of yesterday's data was better than expected, yet traders were still uneasy about getting too aggressive on the buy side. We will have to see if the jobs report can provide the impetus needed to push the major market indices through resistance at their respective 200-day moving averages.
We will make our play Friday.
Until next time.
The Fed decided to cut interest rates by 0.25% as expected, yet traders were not in the buying mood. The Fed took the view that risks are mostly balanced between inflation and economic slowing, which leaves the odds of a further rate hike low....but not unlikely.
The Fed got good news on the inflation and economic growth front this morning in the form of the first quarter GDP report and employment costs. GDP rose 0.6 percent during the quarter, double expectations even while the GDP price index up just 2.6 percent quarter on quarter, 4-tenths below estimates. Employment costs rose 0.7 percent in the first quarter, a tenth below expectations with the year on year growth rate at 3.3 percent. Even the ADP employment report was better than expected, showing a gain of 10,000 jobs.
Now the Fed meeting is over, the focus will turn to the jobs report on Friday. Most of yesterday's data was better than expected, yet traders were still uneasy about getting too aggressive on the buy side. We will have to see if the jobs report can provide the impetus needed to push the major market indices through resistance at their respective 200-day moving averages.
We will make our play Friday.
Until next time.
# posted by Paul @ 6:38 AM 
