The Fed Rate Cut Gives Good News and Bad
October 31st at 2:45pm by Tom Lydon
When it comes to investing and exchange traded funds (ETFs), is the glass half empty or half full?
The Federal Reserve cut interest rates by a quarter point, to 4.5%, and Wall Street sure liked the news, reports Alexandra Twin of CNNMoney. As soon as the decision was announced, stocks sprang to life and the Dow Jones industrial average rose more than 130 points. The Nasdaq jumped 1.5% and the S&P rose 1.2%. ETFs followed, as many hit new highs.
From the Department of Bad News, however, the dollar took a spill to new record lows and broke the $1.45 barrier against the euro. Many experts share the feeling that things aren’t going to be on the upswing anytime soon.
Let’s not end on a sour note, though. The country’s gross domestic product (GDP) defied all expectations and rose 3.9% in the third quarter. That indicates the U.S. is holding up well in the face of the sub-prime mortgage crisis and the lack of liquidity in the financial markets.
