Wednesday, March 19, 2008

Wow, That Didn't Last Long

Looks like the 3/4 point cut didn't help:

NEW YORK (Reuters) - Stocks fell on Wednesday as investors sold stocks to take profits after Tuesday's Fed-aided rally, while a sharp drop in oil prices drove energy shares lower.

The Standard & Poor's index of materials stocks fell 4.9 percent as persistent worries about a recession and the health of the U.S. economy weighed on commodity prices.

On Tuesday, the S&P 500 made its biggest one-day jump in more than five years after the Federal Reserve cut short-term U.S. interest rates by 75 basis points. The Fed's decision, which was expected, brought the benchmark fed funds rate for overnight bank loans down to 2.25 percent from 3.0 percent.

The Fed knew this might happen, so why did they make such an aggressive cut?
"What you're probably seeing right now is simply profit-taking. People have decided that they got what they can out of the Fed meeting and they are now taking some money off the table," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.
Business using the Fed? Never would have expected that...

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