Fed Uncertainty Looms With Pullback On Wall Street
By 1:46 pm Eastern, all three major averages in New York are well into the red: The Dow down 0.43 percent, the NASDAQ down 0.41 percent, and the S&P500 index giving in three quarters of a percent (Yahoo Finance).
Although stocks started out with modest gains in early trading, Wall Street has pulled back Monday with demand for 3-year Treasury bills falling more than expected; that signals that investors and traders are pessimistic as to the direction and where the Fed is going with the current strategy. That just spells uncertainty for investors.
Summer 2007 Stock Market Correction and What to Do
“No one can predict what the stock market will do tomorrow or next month. Which makes it impossible to say if this market correction is over or the start of a bear market. Here are our thoughts on this current stock market and our investing outlook.
For a while now we have been warning our subscribers about a possible market correction sometime this summer. We have been holding excess cash in the Market Flavor Portfolio waiting for a chance like this to buy some stocks on sale. This correction has been exactly what we’ve been looking for and it has provided us a great time to start adding to the Market Flavor stock portfolio.
The main reason we felt a correction was coming was the over exuberance of investors driving stock prices up as corporate earnings have been slowing. The whole subprime mess is still very unclear and we won’t know the whole effect of it for a couple years. Sure the subprime market can cause major chaos, but at the same time banks are still making money off those subprime borrowers that are not defaulting and paying higher interest rates.
Currently the main support for our economy and the US stock market is the booming global economy. This global expansion is providing a safety net protecting us from a full recession. If this boom stops or slows and the US economy hasn’t recovered more, we will see major problems across global stock markets.
With all this in mind, this correction has provided a great time to start investing our excess cash in some of our top holdings. The US stock market will eventually recover and stocks are cheaper today then they were three weeks ago. Don’t throw all your money in at once. Put some in now and then wait to see how long this correction lasts. You might get an opportunity to buy stocks even cheaper! “