Gregory ---from briefing.com this morning .
Finally! After letting the economy slip to the brink of recession, the Fed finally acted boldly and cut rates by 50bp... While some on street fret that timing (intermeeting) and magnitude of cut signal that economy is worse off than many think, Briefing.com not going to spend any time worrying about that possibility... The only thing that matters for investors is that the Fed is now on your side... And that's huge.
Rate cut won't magically resurrect the economy nor will it bolster the near-term earnings outlook for the tech sector... What it does, however, is:
place a floor under the market - safe to say that low has been put in place and that its higher from here.
encourages money off the sidelines - Just yesterday we noted that buyers would remain on strike as long as Fed remained on hold... By cutting rates Fed sent signal to investors both big and small that they would do what is necessary to get the economy back on track... Consequently, investors will begin to look past the soft Q400 and Q101 earnings to the second half of the year when earnings begin to reaccelerate... In anticipation of better times, investors will move quickly to snap up bargains... Yesterday was just the beginning... There is still a ton of cash on the sidelines.
bolsters psychology - Certainly the biggest near-term benefit of the rate cut is the change in investor sentiment from bearish to bullish... With more rate cuts sure to come, sentiment will continue to improve.
Briefing.com had worried that Fed would wait too long and act too slowly to resurrect the economy, not to mention the markets... Though they should have lowered rates last month, by moving so boldly today, Fed proved that it will not let the economy get away from it... They also provided investors the catalyst to buy, and buy they did, and buy they will... Not only did we see record volume on the Nasdaq yesterday, up volume swamped down volume by 13 to 1... Folks, it just doesn't get much better than that.
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