Suitably Flip

Dow Back In Record Territory

The Dow Jones Industrial Average has only closed above 14,000 once, on July 19 of this year, when it nosed in at 14,000.41.  Immediately thereafter, the market went into a spasm of volatility unlike anything seen in years.  Despite the violent convulsions, we never quite tripped the official "correction" threshold of a 10% pullback.  The pullback bottomed out on August 16th, with the Dow just 8.2% below its 14,000 high.  (The S&P 500 had shed 9.5%, while the Nasdaq Composite nearly got the job done with a 9.9% downside move.)

While the worst of the housing- and credit-led not-quite-correction was over with by mid-August, the market has come back more convincingly since the Fed's September 18 announcement that they were lowering interest rate targets by a half percentage point "to forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."

Similarly, today's quarter-inaugurating upside move that's carried most major indices above their July 19 highs, seems to be based at least in part on optimism about additional treats Chairman Bernanke may be getting ready to hand out at the FOMC's Halloween meeting.

While the beginning of the new quarter was an incentive for institutional investors to buy, the market was also encouraged that the worst might be over from the summer's credit and stock market turmoil, and that new economic data would nudge the Federal Reserve toward another interest rate cut at its Oct. 30-31 meeting.
...
"People are getting more confident there is going to be an October rate cut," said John C. Forelli, portfolio manager for Independence Investment.

Previously:
Fed Policy Pick'em [Update: 50 bps All Around]
Okay, Okay, I'm Awake
Wake Me In Another Few Hundred Points
Stocks STILL Up For the Week (But Barely)
Market Continues Its Up Week
Volatiler Still
Volatiler and Volatiler
Uncommon Volatility
Wall Street's Whiplash Wednesday

Comments

Dow Back In Record Territory

The Dow Jones Industrial Average has only closed above 14,000 once, on July 19 of this year, when it nosed in at 14,000.41.  Immediately thereafter, the market went into a spasm of volatility unlike anything seen in years.  Despite the violent convulsions, we never quite tripped the official "correction" threshold of a 10% pullback.  The pullback bottomed out on August 16th, with the Dow just 8.2% below its 14,000 high.  (The S&P 500 had shed 9.5%, while the Nasdaq Composite nearly got the job done with a 9.9% downside move.)

While the worst of the housing- and credit-led not-quite-correction was over with by mid-August, the market has come back more convincingly since the Fed's September 18 announcement that they were lowering interest rate targets by a half percentage point "to forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."

Similarly, today's quarter-inaugurating upside move that's carried most major indices above their July 19 highs, seems to be based at least in part on optimism about additional treats Chairman Bernanke may be getting ready to hand out at the FOMC's Halloween meeting.

While the beginning of the new quarter was an incentive for institutional investors to buy, the market was also encouraged that the worst might be over from the summer's credit and stock market turmoil, and that new economic data would nudge the Federal Reserve toward another interest rate cut at its Oct. 30-31 meeting.
...
"People are getting more confident there is going to be an October rate cut," said John C. Forelli, portfolio manager for Independence Investment.

Previously:
Fed Policy Pick'em [Update: 50 bps All Around]
Okay, Okay, I'm Awake
Wake Me In Another Few Hundred Points
Stocks STILL Up For the Week (But Barely)
Market Continues Its Up Week
Volatiler Still
Volatiler and Volatiler
Uncommon Volatility
Wall Street's Whiplash Wednesday