Reality Sinks In
Stocks are trading narrowly mixed as traders digest
the Fed’s affirmation Tuesday of what the market has been saying for months:
the economy is weak. Stocks initially plunged following the Fed’s
announcement of an expected .25% interest rate cut Tuesday. The Fed’s
accompanying statement about economic weakness gave no indication that the
economic situation will soon turn around, spurring traders to the exit in a
“sell the fact” trade.
But the economic reality — and the stock
market’s reaction to it — have not really changed following the Fed’s
latest affirmation of economic conditions. Stocks bounced back in a reflex
rally yesterday and price action today is muted, as equilibrium is
temporarily established and as the market awaits news of any improvement or
degradation in the economic outlook.
The Dow is down 25 at 10,250, the Nasdaq is up 6.68
at 1866.29, and the S&P 500 is nearly unchanged and trading at 1165.92.
Biotechs
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+1.32%, and networkers
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services
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-1.28% are the weakest areas of Thursday’s market.
Ciena
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being added to the S&P 500 index. Ciena is already a Nasdaq 100
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component. Portfolio managers seeking to mimic the performance of a basket
of stocks such as the S&P 500 need to adjust their holdings by buying or
selling index components as they are added to or deleted from the designated
basket of stocks. When stocks are added to an index, they generally rise as
money managers add them to their portfolios. Ciena is up 3.27% at 18.03.
Retailers, one of the few market segments to manage a
rally this year, are slumping today on disappointing earnings results.
Kmart
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average after gapping down on double normal trade after reporting a loss.
The Limited
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expansion bar lower after reporting profits are down by one half.
Intimate Brands
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volume after matching estimates of a 30% drop in profits and warning of poor
sales expectations ahead.