Fed Rate Cut + Disappointed Investors = DOW Drop

Yesterday... what a day! The Fed cut interest rates by one-quarter of a percentage point to 4.25 percent, and the DOW sure took a hit. A 300 point drop on Tuesday (2.22% loss) This is the third cut in three months... are we trying to fight off a recession?

Investors were split on the projected cut, but with the sharp fall maybe the Fed wasn't as aggressive as some were expecting. It seemed as if there was a trim and not the “needed” slash in rates. The Fed has however suggested that another cut may be in the works if the housing market and the sub-prime crisis worsen. “Expectations may have been for a more meaningful move based on the swirl in the financial markets now. But the Fed is acknowledging that maybe things on Main Street aren't as bad as they are on Wall Street,” said Bill Knapp, economist and chief investment strategist for MainStay Investments.

All is not lost... it looks as if the the market has made quite a rebound today. We are up to the DOW 13700 mark, and the move today has been reassuring. What a correction!

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