Stock Market taking a dump after Fed rate cut announcement

[Dacalo]

I suppose the rally past couple of sessions had the cut already factored into it. Time to look for some bargains.

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/4 percent.

Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today's action, combined with the policy actions taken earlier, should help promote moderate growth over time.

Readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; and Kevin M. Warsh. Voting against was Eric S. Rosengren, who preferred to lower the target for the federal funds rate by 50 basis points at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 4-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis.

 

[Born2bwire]

Heh, my dad was telling me yesterday that he was shorting the Nasdaq 100 in anticipation for the rate cut.

 

[waggy]

the cut it again?

oh man.

 

[Ns1]

woooooooo i wonder if student loan consolidation rates will drop

that would be excellent

 

[Slew Foot]

I locked my student loans in at 1.87% a few years back

 

[Mermaidman]

Is this happening because the rate cut was too small?

 

[woodie1]

Yes, sir. Time to move some more cash into a few bargains.

 

[waggy]

and the tumble is starting...god damn ithis sucks.

 

[ElFenix]

Originally posted by: Ns1
woooooooo i wonder if student loan consolidation rates will drop

that would be excellent

<mr. burns>excellent</mr. burns>

 

[Aharami]

can someone explain why the stocks would go down after the rate gets cut?

<-- stock noob

 

[Dacalo]

Originally posted by: Mermaidman
Is this happening because the rate cut was too small?

Well the investors think so. Also, Fed's remarks regarding the health of economy was more pessimistic than some wanted.

 

[gururu2]

i wouldnt call it taking a dump. up or down 1-2% seems to be the norm lately as everyone is jumpy on any good/bad news in the mortgage fiasco backdrop.

 

[Slew Foot]

Originally posted by: Aharami
can someone explain why the stocks would go down after the rate gets cut?

<-- stock noob

People were pricing in a 50 point cut so 25 points was like a rat raise. Probably better to cut some points off the market than add to the price of oil and kill the dollar.

 

[Modeps]

Currently +1.75%

 

[her209]

Jesus fucking Christ!!!1

 

[Slew Foot]

Originally posted by: Modeps
Currently +1.75%

???
Yahoo shows -1.9%

 

[jman19]

Cool now my money will be worth even less internationally and the market dropped a deuce :thumbsup:

 

[randay]

do you think itll drop anymore?

 

[Modeps]

Originally posted by: Slew Foot

Originally posted by: Modeps
Currently +1.75%

???
Yahoo shows -1.9%

Sorry, I didn't clarify... I'm +1.37% (now)

 

[Slew Foot]

Originally posted by: randay
do you think itll drop anymore?

My gut feel is that itll be flat to slightly down for a year or so, you're going to have a lot of mortgage mess to sort through for the next little while.

 

[Slew Foot]

Originally posted by: Modeps

Originally posted by: Slew Foot

Originally posted by: Modeps
Currently +1.75%

???
Yahoo shows -1.9%

Sorry, I didn't clarify... I'm +1.37% (now)

Gotcha, my speculative put portfolio probably is kicking ass today, ive got those leaped to 2009 so Im holding on for a bit.

 

[Slew Foot]

If youre looking for a safe play, now might be a time to pick up some AT&T. Profitable, increasing its dividend, and buying back some shares, its been good to me for a while.

 

[Svnla]

There goes my savings accounts. Now it will be hard to find 5% or higher yield.

 

[vi edit]

I've always wondered how much money is made off of plays from the FED actions. By this I'm talking "insider" knowledge.

Say somebody from "inside" the Fed lets it slip what they are doing before the call and options are made on that info.

I'm sure it happens, but it would be interesting to know just how rich some people are getting off that insight.

/tinfoil hat off

 

[Slew Foot]

Originally posted by: vi_edit
I've always wondered how much money is made off of plays from the FED actions. By this I'm talking "insider" knowledge.

Say somebody from "inside" the Fed lets it slip what they are doing before the call and options are made on that info.

I'm sure it happens, but it would be interesting to know just how rich some people are getting off that insight.

/tinfoil hat off

I do that, not that I have any inside info, but its usually pretty obvious which way the fed is leaning, the trick is finding out whats already been priced into the stock market.