Irrational Exuberance
So the Dow soared on the news of the Fed interest rate cut, but then they realized what the cut really meant and: Dow tumbles over 280 points
NEW YORK (CNNMoney.com) — Stocks suffered further losses Thursday afternoon on a Citigroup downgrade and disappointing results from oil giant Exxon Mobil.
The Dow Jones industrial average was trading 281 points, or 2.0 percent lower, with 2 hours remaining in the session.
The broader S&P 500 index lost 1.9 percent, while the tech-fueled Nasdaq slipped 1.6 percent.
Trading curbs remained active on the New York Stock Exchange after going into effect early in the session to limit the market’s downside.
Leading the 30-stock Dow index lower was Citigroup, whose stock fell 6.7 percent in afternoon trade to its lowest level in 4-1/2 years.
The Fed doesn’t cut rates when things are going well, they cut them because of problems. People are not going to do a lot of spending with their houses going into foreclosure. They don’t have any equity to borrow against, no matter what the rate, when house prices are dropping like a rock. They aren’t going to blow their bonus or raise on Christmas, because they aren’t getting bonuses or raises. The lending rate is irrelevant when the banks have no money to lend, only a mass of mortgages on rapidly devaluing homes.
Gold and other commodities are spiking, the dollar is dropping, and people are getting pink slips – welcome to the Hedgemony. Wall Street voted for him, and they can live with the results.
4 comments
I’m getting whiplash….
As near as I can tell flipping coins is as accurate as Wall Street “analysis” and a lot cheaper.
fun with dyslexia: i read flipping coins as flying cows.
I’m familiar with “tipping cows”, but having worked on a diary farm, mostly with a shovel and broom, “flying cows” is a pretty scary concept.