Stocks Jump As Rate Cut Hopes Increase (Dow up 335, NASD up 80)

AP?YodleWho! ^ | Wednesday November 28, 2:57 pm ET | By Madlen Read, AP Business Writer

[rightinthemiddle]

Wall Street Has 2nd Straight Rally on Rate Cut Hopes, Signs That Financials Are Finding Cash

NEW YORK (AP) -- Wall Street barreled higher Wednesday for the second day in a row, propelling the Dow Jones industrials up more than 300 points after a Federal Reserve official hinted that the central bank may lower interest rates again.

Investors' renewed hopes for a rate cut added to their relief that companies that made losing bets on subprime mortgages, such as Citigroup Inc. and Freddie Mac, are coming up with ways to raise cash.

Early Wednesday, Fed Vice Chairman Donald Kohn told the Council on Foreign Relations that recent financial turbulence has reversed some of the improvement seen in markets in previous weeks, and could squeeze credit for households and businesses. He said tight financial conditions may merit "offsetting" policy from the central bank.

[rightinthemiddle]

I sold my TXN last Wednesday at $30 and change...I held it for 12 years. I told my broker "this is the bottom" if I'm selling my favorite stock."

Maybe I was right.

[Phantom Lord]

DOW Up! Oil Down!

Democrats deeply saddened.

[Petronski]

But I wanna be doomed!!!

[NeoCaveman]

Dow up over 500 points in two days?

Cool.

[rightinthemiddle]

Goldbugs and Oil Barons deeply saddened.

[rightinthemiddle]

Ping!

[Toddsterpatriot]

LOL!

[rightinthemiddle]

May be close to 600...I don’t see this rally dying today.

But, tomorrow is a different day.

[NeoCaveman]

We are about, what, 700 - 800 points from the all time high or so?

[Cowboy Bob]

How is NYT doing? :0)

[Toddsterpatriot]

About 900.

[sionnsar]

Bush’s fault?

[Petronski]

Nothing makes my week like watching the bears take it right in the teeth.

[NeoCaveman]

Cool.

[jalisco555]

I almost called my broker Monday to tell him to go completely to cash. Glad I didn’t. Probably also a sign of a bottom.

[rightinthemiddle]

Let me check...I think it was 14,300.

Up 365 now.

[NVDave]

You’re exactly correct. When most Americans, who have an upside mental bias (ie, Americans are, by and large, optimists) finally throw in the towel, it is usually close to the bottom.

One of the things necessary to becoming a successful trader (as opposed to investor) is to be able to observe these emotions in one’s self, and then do exactly the *opposite* of what your instinct tells you to do.

I covered shorts earlier this week because I was feeling like “Awwww crap... I’m going to have to sell all these longs and take losses...” so I did the exact opposite: covered my shorts.

When did I put the shorts on? When I was feeling pretty darn pleased with myself.

[rightinthemiddle]

It’s a SELL.

[HamiltonJay]

The Fed Rate Cuts will not stop the impending issues....

Remember folks, Japs fed had rates at 0% for years, and they still were in recession for nearly a decade.

[CygnusXI]

Does this (if they cut rates) translate into lower re-fi rates for mortgages?

[Toddsterpatriot]

I think 14,180.

[jdm]

[Rockitz]

The fed opened the door for a further interest rate reduction. I don’t see how that doesn’t bode well for gold and bad for the dollar long term.

[Larry Lucido]

But, but...oil prices! And the housing bubble! And housing price crash! And flat Chrismas sales! And the credit crunch in March from the, um, from all the Christmas sales..

[Republican Red]

[Petronski]

Does this (if they cut rates) translate into lower re-fi rates for mortgages?

Oddly, no, not directly. Most ARMS are calculated based on an index called LIBOR (and published in the WSJ). RnR will know.

[HamiltonJay]

Hahaha... just stating the truth.

Rate Cuts only do so much... I know it excites the emotional folks on wall street, but much of the issues we are facing are not related to rate cuts.

Not only that, but with every rate cut they do enact, you will see the dollar further slide against foreign currencies.

[Perdogg]

The dollar is doing “better” as well. If they are anticipating a rate cut, why is the dollar going up?

[steve86]

Bear market rallies are vicious, as are topping rallies.

Early 2000 had a rally that somewhat outdid this one.

We all know what happened next.

[Beagle8U]

No, The FR goldbugs said gold was going to $2000.

[Obadiah]

A rate cut! Yipppeee!!!

Inflation here we come!!

[NeoCaveman]

The dollar is doing “better” as well. If they are anticipating a rate cut, why is the dollar going up?

I don't think the author is correct, that this is a rally based on an expected rate cut.

I think this is a continuation of yesterday's rally that had 3 reasons
1. strong holiday sales
2. Abu Dabi stepping in with their petro dollars
3. stocks were getting too cheap.

[dalereed]

I hope they raise rates and send all these fools to the poor house!

[Alberta's Child]

I understand your concern, but it's worth noting that a big difference with Japan is that it has a lot of what might be called "institutional stagnation" -- i.e., no population growth, limited acceptance of immigrants, etc. -- that tends to act as an enormous anchor on their economy.

The U.S. has to cope with some of these factors, but to a far lesser extent than Japan did.

[garbanzo]

no population growth, limited acceptance of immigrants, etc. -- that tends to act as an enormous anchor on their economy.

How does this differ from what a large fraction of people on here want for this country?

[RockinRight]

Fixed rates are based on the 10 year bond as well.

Generally, the LIBOR follows the Prime rate but there is no direct correlation.

[steve86]

I don’t follow it closely but three-month LIBOR rates are up today, and most days.

[Petronski]

...there is no direct correlation.

That's the part I was getting at (or trying to...).

[HamiltonJay]

I’m not implying the US is Japan, I’m just point out that rate cuts are limited in their impact, and the mess of the housing and credit crunch are not going to be alleviated by a rate cut.

There was a long run of good times, and now the piper will be paid. Fed can do things, but it can’t eliminate this.

At the end of the day, the bulk of the economy can be traced back to real property... and the value of that is contracting and going to continue to for quite some time. Rate Cuts won’t change that.

[RogerWilko]

I've been hearing this guy on the top of the news every hour saying how investors aren't paying attention to the housing problems we have. As if trying to say...

"HEY, you idiots... You can't make the markets go up, we've got BIG problems here!"

[NeoCaveman]

What if the media wanted to have a recession but no one participated in it?

[Obadiah]

Then the MSM would be crestfallen because their liberal Democrat brethren would not be assisted in the manner they had hoped for. Does that answer your question?

[oh8eleven]

[NeoCaveman]

Well it was a rhetorical question but you did answer it correctly.

[misterrob]

Rates are going down faster than your beloved Tribe did in games 5-7 of the ALCS!!!!

Hah

[RogerWilko]

They need things to be BAAADDD next year! Don't forget... We got an election and the Dumbacrats need to win!

We need a bad stock market and a bad economy and BY GEORGE... If we don't have one, we'll MAKE ONE UP!

[NeoCaveman]

Pinch’s fault!

[coloradan]

Let’s revisit the question in a year or two.

[Petronski]

Wow, trash-talk from a Boston sports fan.

That's . . . so . . . atypical.

[Phantom Lord]

Generally, the LIBOR follows the Prime rate but there is no direct correlation.

Especially since the LIBOR is the London InterBank Offered Rate.