Mon 10 Dec 2007
Big Rate Cut May Lift Investor Confidence
Posted by Robin Bal under Investing , Stock MarketsAdd Comment
A big rate cut by the Federal Reserve this week, or at a hint more cuts are coming, coupled with this weeks sub prime rescue plan could lift investor confidence and inspire a pre Christmas rally.
While most investors are banking on a cut of at least a quarter percentage points in the bench mark fed funds rate, many think a deeper reduction is needed to unfreeze credit markets and boost confidence.
On Thursday, President George W. Bush announced a plan to stern
“The big focus next week is on the Fed meeting” The market was pricing in an interest rate cut, there was still speculation about how big such a cut would be and whether the Fed would also cut the discount rate.
Encouraging data this week, including a resilient payrolls report on Friday, eased some concerns about the economy, decreasing the likelihood of an aggressive 50-point-basis cut in the fed funds rate.
And with just a few more weeks left in the year, the Dow is up 9.3% so far in 2007. The S&P 500 is up 6.9% for the year to date and the Nasdaq is up 12%.
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