Before trading, the US markets looked to open down big-time following steep declines in overseas markets. Then the FED gave a surprise present, a 75 basis point cut in the interest rate which brought back buyers. In pre-trading the Dow was down 500, but rallied 200 points in minutes after the announcement. For the rest of the day, the rebound failed to really follow thru. Dow ended down 128 with NAZ down almost 48. Decliners beat advancers about 3-2, still a tough day. Beaten up financial & retail stocks recovered from oversold depressed levels. Without those gains, today's results would have been a lot worse. The VIX (volatility index) is at 31, an extraordinarily high level. Bumps ahead will be getting even bigger, hang on!
My favorites, like junk bond funds, REITs, banks, etc. all rebounded. The Treasury 10 year bond also rallied, driving it's yield down to only 3.48%. However, the MLPs pulled back. Their index dropped to a new 52 week low, 385, down 3.61. It rallied off the day's lows, but is still on defense. Many ordinary stocks pulled back. When my Coca Cola (KO) declines 1.95, you know it's been a rough day!
Tomorrow will be a new day with the rate cut fading in memory. Another cut is expected next week at the FED''s meeting, but earnings announcements will be driving the market. The most optimistic will probably be so-so, others will announce poor results. There is a general feeling the US is in a recession which is probably the single most important force driving the market as evidenced by the pullback of the MLPs. Their pipelines keep the economy running. Be strong!
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