ETF Trends
ETF Trends

The news of the Federal Reserve’s lower-than-anticipated rate cut rattled Wall Street near the end of trading on Tuesday, sending the Dow tumbling 294 points. It didn’t look good for exchange traded funds (ETFs), either. Randall Forsyth at Barron’s says that the 0.25% cut in rates for overnight loans between banks was expected, but the markets were disappointed that the discount rate’s 0.25% cut wasn’t as much as people were hoping for.

Perhaps the markets and the Fed just needed to sleep on it, because by this morning, things were looking much brighter. Rob Kelley at CNNMoney.com reports that before the markets opened, the Fed announced that it was joining in a global effort to combat the credit crisis by coordinating its responses with the central banks of Europe, Canada, Britain and Switzerland. It’s creating a temporary credit facility banks can use to make loans to individuals and businesses.

The Dow, Nasdaq and S&P 500 indexes liked what they heard, and all are showing gains early in the day.

Will the joining of financial forces be the magic bullet that solves this problem once and for all? Only time will tell.

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.