The Market's Rate Cut Obsession
Another late-day rally, this one not quite as robust as the last few days, but still the Dow was at 13,550 at 2 PM ET, so we rallied almost 125 points from that low to close at 13,671.
Traders seem to have a near-messianic belief that the coming rate cuts (and many believe that the Fed will cut 100 basis points between now and the next three or four meetings) will help housing, stimulate capital spending, improve business confidence, and cure cancer.
Still, what really has to happen is that financials and to a lesser extent consumer discretionary stocks (retail, home builders) have to find a bottom. Earnings estimates have been coming down for both of these groups in the fourth quarter; markets will remain jittery until we get a little more finality here.
Joy in techland--the mother of all tech laggards, Microsoft , finally breaks out to a 5-year high on strong earning up 10%(!!) after the close.
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