The FOMC's decision to slash key lending rates to lowest levels in 50 years and stated commitment to remedy the ailing U.S. economy, bolstered investor optimism and sent stocks sharply higher. Okay, so now maybe we can breakout of this base before Christmas.The bear market bounce, thus far is a low momentum bounce. Let's see if we can take out last week's highs and move this rally forward.
Earnings trumped weak economic data in the front end of the session with GS losses in check and BBY reaffirming guidance. Narrow range trade noted into midday with typical tight range trade continuing into Fed announcement time.
The FOMC noted that financial markets remain quite strained and credit conditions tight and that the outlook for economic activity has weakened even further. This was their rational for the unprecedented move to target a rate range of 0.00% to 0.25%. The initial reaction was positive and after a pause and retracement, the indices extended the move into the close. The strong advance was across the board with finance pacing the way.
The U.S. dollar dropped precipitously after the FOMC cut rates.
Crude oil still in a trading range but lower dollar should help. Don't forget crude inventories tomorrow at 10:35.
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