This summer’s credit meltdown is far from being cool beans and is simmering over into the markets and financial related exchange traded funds (ETFs). Investors are putting caution to the wind even after Wednesday’s good news of another interest rate cut from the Federal Reserve. In fact, the immediate response was a slight upward push in stocks, but it appears that was the last of the positive effects. Serena Ng and Carrick Mollenkamp for The Wall Street Journal report that the Fed’s enthusiasm regarding this rate cut, as well as the more aggressive one in September, should help keep the damage to the broad economy and credit-market turmoil to a minimum. Financial markets stood grim and many investors are expecting yet another Federal rate cut.
Banks and brokerage firms are bearing the brunt of the stock-market selling. Last week the Dow Jones Industrial Average fell 362.14, or 2.6%, to 13567.87. The S&P 500 also dropped 2.6% to 1508.44. The Nasdaq Composite Index fell 2.2% to 2794.83. Mortgages are decaying at an alarming rate and delinquency and prepayment data are showing up worse than expected. Stabilization is far off as many adjustable rate mortgages are about to reset. Some economists aren’t projecting a recovery from the mortgage crisis until 2009-2010.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.