For awhile this afternoon, it looked like the stock market might actually have a good day. When it started, the Federal Reserve Board, joined by pretty much every significant central bank in the world, had cut interest rates in an effort to introduce more liquidity into the financial system. In the morning, the Dow was down, but it started turning around and it looked like it would end the day in positive territory for the first time since last Tuesday.
And then, well, just take a look at the chart:
What happened around 3:15 this afternoon, you might ask.
Well, Treasury Secretary Henry Paulson was speaking at right about that time:
Treasury Secretary Henry M. Paulson Jr. tried this afternoon to reduce investor expectations that a further federal intervention into the financial markets was imminent.
Paulson said the government now has the necessary tools to deal with the financial crisis, though he warned that progress may not be visible for some time, because of the depth of the problems.
“I’m confident we have the authorities we need to work with going forward here,” Paulson said at an afternoon press conference.
Stocks remained volatile this afternoon after central banks across the globe implemented emergency rate cuts. The markets fell deep into negative territory this morning only to swing back hours later. Just after Paulson finished his remarks, the Dow was heading into the red again, down less than one percent. The Nasdaq and the Standard & Poor’s 500 were each up one percent.
(…)
The tepid response to today’s cut reflected concern that the rate cut would not be enough, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. “Officials didn’t even have time to pat themselves on the back before the market said, ‘So what? This doesn’t address the problem,’ ” said Chandler. “The crisis is not driven because interest rates are too high. . . . Every time officials do something that doesn’t work, it breeds even greater anxiety.” After initially helping cut losses, overseas markets continued their declines. London’s FTSE 100 fell about 5 percent while Germany’s Dax 30 and Paris’ CAC 40 were down 6.5 percent and 4.61 percent respectively. Europe is scrambling to stabilize its financial sector, and London unveiled a plan today to infuse $87 billion of capital into major banks.
Coincidence ? You decide.
In any case, it’s worth noting that the stock market, as measured by the Dow Jones Industrial Average, has declined 1066.89 points, or 10.33 % since Monday alone. And there’s no real indication that we’ve hit bottom yet.
