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U.S. stocks fall after Fed comments
Yahoo (Reuters) ^ | Wednesday January 28, 2:27 pm ET | Reuters staff

Posted on 01/28/2004 11:41:34 AM PST by The_Victor

(Updates with Fed comments)

NEW YORK, Jan 28 (Reuters) - Stocks fell on Wednesday after the Federal Reserve, as widely anticipated, said it will leave interest rates unchanged at 45-year lows, but made comments that indicated it might be closer to a rate hike.

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The U.S. Federal Reserve opted on Wednesday to hold interest rates at 1958 lows to keep the economic recovery rolling. But it changed its wording on the future of rates slightly to say it can "be patient" before lifting borrowing costs.

Low rates are good news for stock prices and the economy, since they help fuel corporate earnings growth by keeping a lid on borrowing costs.

After the Fed's comments, the Dow Jones industrial average (^DJI - News) fell 66 points, or 0.62 percent, to 10,544. The Standard & Poor's 500 Index (CBOE:^SPX - News) was down 7 points, or 0.62 percent, at 1,137. The technology-laced Nasdaq Composite Index (NasdaqSC:^IXIC - News) dropped 17 points, or 0.80 percent, to 2,099.




TOPICS: Breaking News; Business/Economy; Government; News/Current Events
KEYWORDS: fed; interestrates; stocks
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Yuck
1 posted on 01/28/2004 11:41:34 AM PST by The_Victor
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To: The_Victor
Chart

2 posted on 01/28/2004 11:44:33 AM PST by The_Victor
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To: The_Victor
I'm looking forward for the first rate hike. Housing market should tumble and good deals will be just right around the corner. The lower prices should outweigh the increase in interest rates. Anyway, this is my theory.

***The author of this message is not responsible for......yada-yada-yada........
3 posted on 01/28/2004 11:45:11 AM PST by mlbford2
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To: mlbford2
I'm looking forward for the first rate hike.

I think you should short treasuries so that you'll have more money for the lower house prices. (;>)

4 posted on 01/28/2004 11:49:36 AM PST by Stentor
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To: The_Victor
Shutup FED. You guys talk too much.
5 posted on 01/28/2004 11:50:43 AM PST by demlosers (<a href="http://www.michaelmoore.com">Miserable Failure</a>)
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To: The_Victor
The stock market needs to take a breath for a few weeks. Might be some buying opportunities a little later.
6 posted on 01/28/2004 11:50:47 AM PST by RightWhale (Repeal the Law of the Excluded Middle)
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To: RightWhale
This will have a two fold effect. Cool down the market a bit but also will prompt companies to take advantage of the cheaper money now to upgrade and expand.
7 posted on 01/28/2004 11:57:36 AM PST by OldFriend (Always understand, even if you remain among the few)
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To: demlosers
"Shutup FED. You guys talk too much."

Actually, it's what the Fed didn't say that has the stock market in a funk. In its statements after meetings since this past summer, the Fed has said that they would leave interest rates low for a "considerable period" of time. The "considerable period" phrase was unexpectedly dropped in today's statement. This doesn't mean interest rates are on their way up any time soon, but it gets rid of what would be a future impediment.
8 posted on 01/28/2004 11:58:03 AM PST by green iguana
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To: The_Victor
Let me guess. Greenspan puts out a manure storm of contradictory statements, as usual, and the nation is enthralled. The reality is he won't hike rates until John Snow or GWB says he's concerned about the weak dollar.
9 posted on 01/28/2004 11:58:54 AM PST by Moonman62
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To: Moonman62
Excuse for selling, need a 10%-15% correction anyways...
10 posted on 01/28/2004 12:00:27 PM PST by dakine
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To: RightWhale
a few weeks. Might be some buying opportunities a little later

Typically the indexes pull back for about 3 weeks after having gone up as they have.  We all know the prices fluctuate regardless, so we can make money whether prices go up or down. 

Just the same, I like it better when prices go up.

11 posted on 01/28/2004 12:03:27 PM PST by expat_panama
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To: The_Victor
10-YR YIELDS EXPLODE, AS GOOD AS A 25-BP RISE IN FED RATES.

Greenspan is a real douchebag. there was absolutely NO reason for the FOMC to alter their "considerable period" wording.

12 posted on 01/28/2004 12:03:29 PM PST by montag813
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To: Moonman62
The market places way too much credence in the words of one man.
13 posted on 01/28/2004 12:04:08 PM PST by The_Victor
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To: mlbford2
So if i would want to sell my house as well look for a house, am I screwed? (I know next to nothing about the market)
14 posted on 01/28/2004 12:04:25 PM PST by smith288 ("YEEEEEEAAAAAAAAAAWWWWWWWWWWWW" - Howard Dean)
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To: Moonman62
The reality is he won't hike rates until (John Snow or) GWB (says he's concerned about the weak dollar) is safely re-elected.

I would have crossed out what I put in parenthesis, but I'm HTML challenged...
15 posted on 01/28/2004 12:05:19 PM PST by green iguana
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To: mlbford2
I'm looking forward for the first rate hike. Housing market should tumble and good deals will be just right around the corner. The lower prices should outweigh the increase in interest rates. Anyway, this is my theory.

This IS the first rate hike, as mortgage rates will be 0.25% higher this week than last because of the stupid Fed wording.

Howver keep in mind that the housing market tends to INCREASE when rates start to rise, as brokers push fence-sitters to "grab it while rates are still low". Wait for that final push, and then look for a drop.

16 posted on 01/28/2004 12:05:20 PM PST by montag813
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To: smith288
if i would want to sell my house as well look for a house, am I screwed?

There are degrees of upside-downness in home ownership. If the market is at its peak now and headed down, changing homes wouldn't bring an advantage unless moving to a cheaper house. Sell the 6000 foot mansion, learn to love a shotgun shack. Put the difference in highly liquid funds.

17 posted on 01/28/2004 12:09:26 PM PST by RightWhale (Repeal the Law of the Excluded Middle)
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To: dakine
Excuse for selling, need a 10%-15% correction anyways...

Maybe, but for the support levels for the past 6 months seem to be only about 5-7 percent down.


18 posted on 01/28/2004 12:15:37 PM PST by expat_panama
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To: The_Victor
So that's why it droped like a ROCK!
19 posted on 01/28/2004 12:19:48 PM PST by OXENinFLA
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To: The_Victor
I cannot think of a worse possible time to raise rates than now.

Before Greenie was all legacy obsessed with inflation. Now, we have zero inflation essentially and are just getting some growth numbers and he has to leave little telltale signs about rate hikes...stupid.

My ceiling on a commercial mortgage I am currently negotiating just went up probably a point.

Peckerhead!

Where is Paul Volker anyhow?
20 posted on 01/28/2004 12:20:46 PM PST by wardaddy ("either the arabs are at your throat, or at your feet")
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To: green iguana; demlosers; The_Victor
The market places way too much credence in the words of one man.

Shutup FED. You guys talk too much."

Watching the market consensus is like watching fish in a tank-- all one way and then all the other.  I feel like yelling "when ever you kids are through, the adults here would like to get some work done!".

21 posted on 01/28/2004 12:23:47 PM PST by expat_panama
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To: The_Victor
Wall Street is full of idiots. They act on emotions much more than rational. How can someone react in such crazy and irrational fashion based on "remain to be patient" statement from the Feds. The fact remains that the Feds have kept the interest rate at the lowest level in 46 years but Wall Street is hanging up on one meaningless statement. I just cannot believe this, what do these morons in Wall Street want to hear....
22 posted on 01/28/2004 12:28:14 PM PST by jveritas
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To: wardaddy
I always had my reservations about 'Sir Alan' ever since he posted that extremely pessimistic gdp report right before election day of '92 --only to revise it way up afterwards.
23 posted on 01/28/2004 12:29:38 PM PST by expat_panama
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To: expat_panama
Well, at least he's not on an irrational exuberance kick.

I would bet the markets will be back up some quite soon.

I see no good reason yet to even hint at hikes...if anyone here feels otherwise (besides the Goldbug/doomgloomers) please feel free.
24 posted on 01/28/2004 12:37:15 PM PST by wardaddy ("either the arabs are at your throat, or at your feet")
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To: wardaddy
Pardon! Momento! Excusa!

Where did you get the idea that the Federal Reserve sets the rates?

Sorry! The market sets the interest rates all the Fed can do is print more or less money to try to effect the rates.

Nice Try!

Regards,
Lurking'
25 posted on 01/28/2004 12:49:23 PM PST by LurkingSince'98
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To: wardaddy
Exactly. I get all grumbly when the indexes dip, forgetting that I can only sell high after having bought low. As luck would have it I've been waiting for precisely this buying opportunity -- having just opened a new margin account with Ameritrade...
26 posted on 01/28/2004 12:49:42 PM PST by expat_panama
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To: LurkingSince'98
idea that the Federal Reserve sets the rates?

They do set the discount rate, which has a lot of influence.

27 posted on 01/28/2004 12:52:11 PM PST by expat_panama
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To: montag813
Greenspan is the worst Fed chairman ever. He did in GHW Bush and now he'll do in GW Bush.
28 posted on 01/28/2004 12:54:00 PM PST by tomahawk
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To: dakine
You nailed it. As others have pointed out there will no rate hikes for months or more. There is no real concern about the dollar's weakness since that will fuel the recovery and force the Europeans to aid it.
29 posted on 01/28/2004 12:59:06 PM PST by justshutupandtakeit (America's Enemies foreign and domestic agree: Bush must be destroyed.)
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To: expat_panama
"They do set the discount rate, which has a lot of influence."

A lot of influence is like close in horseshoes - its good most of the time, but when push comes to shove the Fed will be following the curve in a major attempt to catch-up.

It is more than a little comforting to know that the Fed doesn't run everything. The problems is that they have influenced everything (your words) to the point that when the break comes their leverage will be gone.

Regards,
Lurking'
30 posted on 01/28/2004 12:59:15 PM PST by LurkingSince'98
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To: The_Victor
The market places way too much credence in the words of one man.

There is no small irony in the fact that this particular 'one man' is a devotee of Ayn Rand, whom some on this board value higher than George Washington. I think Alan has an Atlas complex, and loves the media attention every time he, er, shrugs.

Radical libertarians are as liberal authoritarians do.

31 posted on 01/28/2004 1:00:01 PM PST by Publius Maximus (Compassionate Conservatism: Profligate Liberal Spending With A Conservative Rhetorical Twist)
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To: expat_panama
And the federal funds rates.
32 posted on 01/28/2004 1:00:47 PM PST by justshutupandtakeit (America's Enemies foreign and domestic agree: Bush must be destroyed.)
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To: The_Victor
The market has moved a long way in a short time. Would not be surprised if this was the start of a more substantial correction. Not necessarily a bad thing.
33 posted on 01/28/2004 1:03:32 PM PST by TBall
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To: LurkingSince'98
I carry a shiteload of commercial real estate mortgages, save the cute nuance for someone else.

Nice Try!

Regards,

Wardaddy
34 posted on 01/28/2004 1:04:52 PM PST by wardaddy ("either the arabs are at your throat, or at your feet")
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To: TBall
a more substantial correction

Would you say that this news is bigger than anything that's happened in the last six months and would justify changing six-month support levels?

35 posted on 01/28/2004 1:08:31 PM PST by expat_panama
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To: The_Victor
Cisco already has had a 10% or so correction from its high. Cisco is a bellweather in the tech area. I predict there will be not a whole lot more downside.
36 posted on 01/28/2004 1:13:17 PM PST by what's up
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To: what's up
Yes but look at the graph....big uptick in final minutes on MASSIVE BUYING.

Its just another buying opportunity..

= TDIDS

37 posted on 01/28/2004 1:17:10 PM PST by spokeshave (It took Bush LESS time to topple Saddam than it took Janet Reno to topple the Branch Dividians in Wa)
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To: The_Victor
This is nothing unexpected. As of the end of last fall the market was acknowledging that the great "refi boom" was all but over and I have been conditioning my clients for just that. By omitting the promise the Fed is just preparing the field for the inevitable rate increase that we all know is coming. This, at least, will make it easier to digest rather than having everything be all hunky-dory and then have the rug ripped out from under us.
38 posted on 01/28/2004 1:19:53 PM PST by SquirrelKing (a href="http://www.michaelmoore.com" target="_blank">miserable failure)
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To: expat_panama
This news was nothing and the market was looking for an excuse to sell. I would not be surprised at all to see the DJIA bottom out around 9800 over the next few weeks.
39 posted on 01/28/2004 1:19:57 PM PST by TBall
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To: RightWhale
Yes, and better to do it now.
40 posted on 01/28/2004 1:20:34 PM PST by CasearianDaoist
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To: wardaddy
Are you fromn the Middle East, I didn't know the Shites could carry mortgages.

All kidding aside, have you considered selling them.

For what I see coming it's not a good place to be.

Regards,
Lurking'
41 posted on 01/28/2004 1:22:33 PM PST by LurkingSince'98
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To: The_Victor
the Fed should be put under the Executive and/or Legislative branches of the U.S. Gov't and taken out of the position it is in now ...
42 posted on 01/28/2004 1:25:11 PM PST by Bobby777
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To: jveritas
Wall Street is full of idiots. They act on emotions much more than rational. How can someone react in such crazy and irrational fashion based on "remain to be patient" statement from the Feds. The fact remains that the Feds have kept the interest rate at the lowest level in 46 years but Wall Street is hanging up on one meaningless statement. I just cannot believe this, what do these morons in Wall Street want to hear....

just ignore the hype, i do. i'm in the market for the long run. the children can buy,sell,buy,sell all they want and probably lose money. hardly anybody makes money daytrading so just ignore all the talking heads because they are all idiots.

43 posted on 01/28/2004 1:26:32 PM PST by holdmuhbeer
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To: SquirrelKing
Don't you think that 1) they have to give OPEC some sort of (public) signal that this will happen sooner or later this year (can't have them pricing in Euros or a mixed basket) and 2) It gives the US a little more negotiating room in the upcoming G7 finance meeting.
44 posted on 01/28/2004 1:29:41 PM PST by CasearianDaoist
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To: LurkingSince'98
I develop commercial real estate. I'm not a mortgage trader.
45 posted on 01/28/2004 1:37:42 PM PST by wardaddy ("either the arabs are at your throat, or at your feet")
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To: The_Victor
With the economy coming back, rates need to increase to avoid malinvestment. Also, our trade and budget deficits require A LOT of foreign capital, and without better rates the money will simply not flow here, which is already hurting the dollar.

The inevitable little correction to the RE market wouldn't be the worst thing in the world, either.
46 posted on 01/28/2004 1:41:23 PM PST by LN2Campy
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To: TBall
see the DJIA bottom out around 9800 over the next few weeks.

Anyone else?

47 posted on 01/28/2004 1:42:30 PM PST by expat_panama
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To: CasearianDaoist
Don't you think that 1) they have to give OPEC some sort of (public) signal that this will happen sooner or later this year (can't have them pricing in Euros or a mixed basket) and 2) It gives the US a little more negotiating room in the upcoming G7 finance meeting

Yeah, thinking globally, that makes sense. I'm hardwired for local stuff but in terms of G7 it seems to give us a slightly better hand.

48 posted on 01/28/2004 1:54:58 PM PST by SquirrelKing (a href="http://www.michaelmoore.com" target="_blank">miserable failure)
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To: montag813
If the market is reading Greenspan's thoughts to this extent, we might be in a precarious economic situation. When the economy is clearly strong or weak, it doesn't matter much what he says or does.
49 posted on 01/28/2004 1:55:19 PM PST by RightWhale (Repeal the Law of the Excluded Middle)
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To: expat_panama
Just a couple quick points on todays turnaround....


Based on changes in the Wilshire, the total value of U.S. stocks retreated by $192.6 billion today alone...

Nasdog Loses 1.8% for largest decline since Dec. 9th

Dow pares it's advance for the year to 0.1% Dow and S&P500 had their biggest declines since 10-22

Canadian dollar slides after Fed statement; U.S. mortgage bonds sink. US muni money mkt funds see $611 mln wkly outflows

Welcome to the "Hotel California"

Meanwhile, Ameritrades quote provider went down, it also brought down ETrade and Scwhab.

If it was due to poor infrastructure to handle the volume, people will sue to recover damages.

The major online trading sites ALL go down in unison during a market collapse, leaving their customers unable to trade during the breakdown of the S&P 500. Just take a wild guess how much the market would have been down if retail investors had been allowed to trade!

If these systems were not equipped to handle today's volume, imagine how they'll respond in a REAL MELTDOWN. Anybody who is playing the long side needs to remember what happened here today. In the event of an emergency, the exits are totally closed.

"You can check out any time you like...but you can never leave!"
50 posted on 01/28/2004 2:15:51 PM PST by Fyscat
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