Nasty day at the stock market today. Dow lost nearly 300 pts….

[CAwireman]

Stocks Tank on Fed Sentiment, Housing
By MADLEN READ,AP
Posted: 2007-08-28 15:59:17

http://money.aol.com/news/articles/_a/stocks-tank-on-fed-sentiment-housing/20070821145309990001

NEW YORK (Aug. 28) – “Volatility returned to Wall Street Tuesday, sending stocks plunging as investors grew more uneasy about the economy and whether the Federal Reserve will take the steps needed to prevent credit market problems from spreading further. The Dow Jones industrials fell more than 250 points.

The market found little to assuage its concerns in minutes from the Fed’s last meeting, released during afternoon trading. The major indexes’ losses steepened after investors parsed the minutes for signs of a possible cut in interest rates.

There had been some hope on the Street that Fed policymakers might have sent a stronger signal that they were more willing to cut interest rates to help calm turbulent market conditions. But in the minutes from the Federal Open Market Committee’s Aug. 7 meeting, while the central bank noted the turmoil in the markets and said, “to the extent such a development could have an adverse effect on growth prospects, might require a policy response,” it didn’t discuss a cut in the benchmark federal funds rate that Wall Street has wanted.

The meeting predated a number of actions taken by the central bank to try to alleviate market volatility, including the Aug. 17 lowering of the discount rate, the interest the Fed charges banks to borrow money. Wall Street, despite a calmer week after that step, seems to be growing more dissatisfied because the Fed has not yet lowered the funds rate.

“This is backward looking right now, the main thing you have to take out of this is the Fed continues to be worried about inflation and economic growth,” said Ryan Larson, senior trader with Voyageur Asset Management. “They have already assured they stand ready to do something. But, the market was looking for more of a nod or a mention toward the credit problems – and I don’t think they got it.”

Stocks were down the entire session on further worries about the economy. The Conference Board’s report that consumer confidence sagged in August amid volatile financial markets and ongoing housing problems added to the downbeat mood on the Street. Keeping alive credit worries, a Standard & Poor’s housing index showed that U.S. home prices in the second quarter posted the sharpest decline since 1987.”

Is it conceivable that the Dow could drop well below 13000, and stick?

[Bugs]

I would ask:

Is it conceivable that the Dow could drop well below 10,000 and stick?

[Bugs]

I would ask:

Is it conceivable that the Dow could drop well below 10,000 and stick?

[Bugs]

I would ask:

Is it conceivable that the Dow could drop well below 10,000 and stick?

[JES]

Hopefully, then we will have at least one asset class that is cheap again and we can all start buying stocks.

[JES]

Hopefully, then we will have at least one asset class that is cheap again and we can all start buying stocks.

[LA_Renter]

OK, I just watched Larry Kudlow on CNBC. He indicated that the Supply Side view of slashing of the Fed Funds rate will actually strengthen the US Dollar. That seems to be the mantra coming from Wall Street. Talk about addiction and rationalization. I am open to hearing views on this because as much as these guys come across to me as cartoon characters they have a tendency to always get their way. They are basically lobbying for a major Central Bank bailout. Of course we are having these problems right now because of the Central Bank bailouts of the past pioneered by Greenspan. Moral Hazard.

This is really starting to drive me crazy. The only way the US can sustain it’s GDP is if people continue to spend more than they make. A major central bank bailout will pump money into the next bubble….consumer credit. So the party goes on for a little while longer. I am relatively moderate in most of my views but this is becoming clear to me that these people are going to take this country into a nightmare. Of course we may already be there. Am I missing something here??

[LA_Renter]

OK, I just watched Larry Kudlow on CNBC. He indicated that the Supply Side view of slashing of the Fed Funds rate will actually strengthen the US Dollar. That seems to be the mantra coming from Wall Street. Talk about addiction and rationalization. I am open to hearing views on this because as much as these guys come across to me as cartoon characters they have a tendency to always get their way. They are basically lobbying for a major Central Bank bailout. Of course we are having these problems right now because of the Central Bank bailouts of the past pioneered by Greenspan. Moral Hazard.

This is really starting to drive me crazy. The only way the US can sustain it’s GDP is if people continue to spend more than they make. A major central bank bailout will pump money into the next bubble….consumer credit. So the party goes on for a little while longer. I am relatively moderate in most of my views but this is becoming clear to me that these people are going to take this country into a nightmare. Of course we may already be there. Am I missing something here??

[Ex-SD]

Bugs……………you asked the same question that’s been going around in my head for the last couple of weeks. I think there’s a strong chance that it may do just that. I hope NOT……….. but there’s a lot of mess to be cleaned up and I think it’s going to keep affecting the market negatively for the next year or two.

[Ex-SD]

Bugs……………you asked the same question that’s been going around in my head for the last couple of weeks. I think there’s a strong chance that it may do just that. I hope NOT……….. but there’s a lot of mess to be cleaned up and I think it’s going to keep affecting the market negatively for the next year or two.

[HereWeGo]

Bugs-
No way. The Fed will absolutely stop that from happening.

That said, I could see the stock market touching that 12,500 level, or maybe even the 12,000 level, but soon thereafter the FFR would be slashed.

The interesting aspect of the market today was the inability of the bulls to mount any sort of rally. That probably means the market dips strongly at tomorrow’s opening.

[blue_sky]

Reducing the FFR does not cause the stock market to rise. See the rate cuts in 2000 for a recent example.

[no_such_reality]

No way. The Fed will absolutely stop that from happening.

The Fed won’t do anything. That’s only a 30% correction, pretty typical for corrections.

[HereWeGo]

LOL.
Remind me, nsr, what event occurred on options expiration day that “kneecapped” the shorts?

[no_such_reality]

In the short run, the Fed can goose the market. In the long run, the Fed will be ineffective in stopping a correction in a recession.

[Author]

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