Stocks slump post-Fed

[HenryTo]

I'm probably the last one to comment about this. I took a day off work today and it was beautiful! No used getting glued to the screen watching every single move in the stock market - unless I was a multi-billion dollar hedge fund with a dozen PhDs and quants sitting around trying to take advantage of every small move in the stock market.

Anyway, the Fed Funds rate is now at 3.25% and the 10-year actually declined again to 3.945%, with the 30-year now at 4.219%. Simply amazing. The stock market has rallied before when the spread was this low (most recently 1995 and most of 1998) but there were definitely bumps in between (the year 1994 wasn't much to write home either). I will be relatively optimistic here and say that the cyclical bull market is going to continue - but not before we suffer a more painful correction than we have seen in the last 18 months or so:
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Post-Fed slump for stocks
Dow tumbles after central bank lifts rates as expected but gives no signal that it will pause soon.
June 30, 2005: 6:11 PM EDT
By Alexandra Twin, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Stocks slumped Thursday, ending the quarter and the first half on a sour note as investors expressed disappointment that the Federal Reserve seems unlikely to stop its rate-hiking campaign anytime soon.

The Dow Jones industrial average (down 99.51 to 10,274.97, Charts) tumbled about 100 points, or nearly 1 percent.

The broader Standard & Poor's 500 (down 8.52 to 1,191.33, Charts) index fell around 0.7 percent and the Nasdaq composite (down 11.93 to 2,056.96, Charts) lost nearly 0.6 percent.

Stocks had been flat to higher in the morning as investors absorbed Bank of America's $35 billion bid to buy credit-card issuer MBNA, and geared up for the Fed.

But stocks began sliding shortly after the 2:15 p.m. EDT announcement from the central bank, and the sell off picked up momentum in the last half hour of trading.

The Fed raised the target for its fed funds rate, an overnight bank lending rate, another quarter point, to 3.25 percent, and pledged to keep raising rates at a "measured" pace. That pledge, along with other fairly hawkish comments in the statement, was interpreted to mean the Fed is unlikely to pause soon.

Treasury prices built on earlier gains after the statement, sending yields lower. The dollar slipped versus the euro and gained versus the yen.

Original link: http://money.cnn.com/2005/06/30/markets/markets_newyork/index.htm