Wednesday, August 06, 2008
Fed Day
It was Fed Day Tuesday with the Fed announcing its interest rate decision and stocks rallied steeply on the back of more drops in oil prices and a Fed statement that was not as bearish as expected. The Dow gained 331.62 points to close the session at 11,615.77. The SPX rallied 35.87 points to end on 1,284.88.
Only two things of note happend Tueday; the Fed statement and oil prices. Both of these provided strength for stocks, although there remain plenty of problems with the economy.
Oil prices fell again Tuesday, touching a low at $118 before settling at $121.41 for a decline of $2.70 a barrel. Concerns about a slowing economy are taking oil prices lower and the commodity also fell due to the fact Tropical Storm Edouard didn’t hit key installations in the Gulf of Mexico. It was less than a month ago when crude prices moved above $147 a barrel. The hope is the commodity will continue to drop, easing fuel prices and helping cool down inflation pressures.....however technical geeks will note that oil is now coming down to a major support level so don't be surprised if we see a rally again.
Everyone assumed that the Fed would leave rates at 2% (which they did) but we were all looking forward to the statement which would reveal my about the state of the economy. The Fed noted in its statement that pricing pressures remain a concern. However, only one of the 12 member committee voted to raise interest rates. Even noted hawk Charles Plosser did not vote for a rate hike and the committee stated that risks to economic growth and pricing pressures remained of equal concern. The fact the Fed didn’t preach doom and gloom in their statement left traders in a buying mood, but we will have to see if these gains continue or if some profit taking occurs the rest of the week.
Now this major event is out of the way and we have seen a nice rally we will be looking to get something on.
Until next time.
Only two things of note happend Tueday; the Fed statement and oil prices. Both of these provided strength for stocks, although there remain plenty of problems with the economy.
Oil prices fell again Tuesday, touching a low at $118 before settling at $121.41 for a decline of $2.70 a barrel. Concerns about a slowing economy are taking oil prices lower and the commodity also fell due to the fact Tropical Storm Edouard didn’t hit key installations in the Gulf of Mexico. It was less than a month ago when crude prices moved above $147 a barrel. The hope is the commodity will continue to drop, easing fuel prices and helping cool down inflation pressures.....however technical geeks will note that oil is now coming down to a major support level so don't be surprised if we see a rally again.
Everyone assumed that the Fed would leave rates at 2% (which they did) but we were all looking forward to the statement which would reveal my about the state of the economy. The Fed noted in its statement that pricing pressures remain a concern. However, only one of the 12 member committee voted to raise interest rates. Even noted hawk Charles Plosser did not vote for a rate hike and the committee stated that risks to economic growth and pricing pressures remained of equal concern. The fact the Fed didn’t preach doom and gloom in their statement left traders in a buying mood, but we will have to see if these gains continue or if some profit taking occurs the rest of the week.
Now this major event is out of the way and we have seen a nice rally we will be looking to get something on.
Until next time.
# posted by Paul @ 5:29 AM 
