The Fed’s Credibility Problem
There was an interesting little development this afternoon. The market seemed to bottom around 1:15pm EST and started to rally ahead of the Fed minutes scheduled to be released at 2:15pm EST. The S&P rallied about 14 points, from 1444 to 1458 in the hour leading up to the release of the minutes. And the release did in fact seem to be weighted towards a concern with economic growth and thus the prospect of future rate cuts, according to The Wall Street Journal (“Fed Sees Potential For More Rate Cuts, According To December Minutes” (subscription required)).
But traders just sold the news as the S&P has given back about 9 points of the move to 1449 in the half hour subsequent to the release (S&P Intraday Chart).