Fed Announcements and the Market
As an Econ major and moderately serious investor I feel I have a pretty good understanding of both the Fed and the stock market. Consensus expected the interest rate to stay the same and it did. The Fed also mentioned credit markets as a cause for concern but are not easing their stance on fear of inflationary pressure. All of this was expected and there was nothing in the FOMC announcement that appears out of the ordinary to me. Yet after the market being slightly up, it plummets over 0.5% in a knee jerk reaction. Maybe I missing some essential element, but I don't understand why the reaction occurs that way and so quickly. Is this just an irrational psychological issuer, or is there something more solid to it? I am just interested to hear some thoughts.
|