Dow Up 68 on Fed Comments
The comments by Dallas Federal Reserve President, Richard Fisher, helped push the Dow up 68 points,
Stocks rose smartly Monday after Dallas Federal Reserve President Richard Fisher suggested inflation would be dampened by a slowing economy and said that while the housing and auto sectors are economic weak points, the rest of the U.S. economy is doing “extremely well.”
His remarks pushed stocks higher in what had been a session of seesaw trading, with investors first bidding stocks higher on lower oil prices, then sending them lower on falling housing prices. Investors, alert to any sign of a sharp economic slowdown, have been especially skittish in recent sessions as data has shown a slowing housing market while bond yields and oil prices have fallen hard.
This is definitely an optimistic outlook. Others are not so optimistic,
The market has been struggling with whether to cheer some of the signs the economy is cooling — such as lower commodities prices — or whether to worry about the possibility of a recession. An unexpected decline last week in the Philadelphia Federal Reserve’s manufacturing conditions survey, which showed stalled growth, helped send the market lower Thursday and Friday.
“I don’t think there’s any question we’re heading into a recessionary environment, ” said John O’Donoghue, co-head of equities at Cowen & Co. “The question is how severe it’s going to be.”
As Brad DeLong has noted, predicting recessions is a fools game. However, one thing seems certain, the economy is slowing down. We’ll know by how much in the next several months.
