2008 Markets off to Inauspicious Start
2008 started off the same way that 2007 ended as far as the stock markets were concerned. On the first day of trading in the new year, the DOW dumped 220 points, and at some points during the day, was below the 12,000 mark. It did rally a bit to close at 13,043. On the NASDAQ, losers were at a 2:1 ratio over advances, and the market closed down 1.61%.
There were plenty of bad omens during the day: oil broke through the $100 a barrel price, before closing at $99.62, and gold finished at $857 per ounce, up over $22.
The Fed offered up its minutes from its Dec. 11th meeting, and it was not full of holiday cheer either, stating:
Financial stresses could increase further, intensifying the contraction in housing markets and restraining other forms of spending, and . . .the economic outlook unusually uncertain. Some members noted the risk of an unfavorable feedback loop in which credit market conditions restrained economic growth further, leading to additional tightening of credit; such an adverse development could require a substantial further easing of policy.
It sounds like more cuts may be on the way when the board meets later in the month, but whether the Fed has many more magic bullets left in its arsenal remains to be seen. Unfortunately, flipping the page in the calandar doesn’t wipe the slate clean for troubled economies.
