You've heard it before: The market hates uncertainty | Analysis by Paul R. La Monica
New York Federal Reserve chairman Jerome Powell had the chance Wednesday to show the financial markets that he has heard their message loud and clear, by promising the Fed would lower rates numerous times for the foreseeable future.
Instead, he created more uncertainty about what the Fed plans to do next. You've heard it before: The market hates uncertainty.Investors were spooked after Powell said Wednesday's cut may be merely"a mid-cycle adjustment to policy," and not"the beginning of a lengthy cutting cycle."Stocks plunged. Powell later clarified that the Fed wasn't necessarily going to stop with one rate cut after a reporter pointed out the market's steep drop.
Powell asked if Fed gave into Donald Trump 01:08"Data dependency used to be the Fed's shield," Richardson said."But the Fed is moving from being data driven to looking around the corner. Is Powell still looking at the data or ambiguous threats?" One of those ambiguous threats is the possibility that the US-China trade tension, if unresolved, could eventually cool off the economy in a significant way. But that hasn't happened yet.
Moody's analyst says Fed rate cut was justified 02:06Sure, there are some pockets of weakness in the US economy that bear watching, particularly the housing market and manufacturing sector. The ISM Manufacturing Index for July came in a bit lower than expected Thursday morning, for example.The stock market rallied after that report because investors felt that more data like this could prompt the Fed to cut rates further after all.
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