Stocks neither gain nor lose
February 28, 2008
On a day when the stocks decided to play funny the trade ended with markets closing on a mixed territory. On the 27th of February the investors were in a mixed state of mind on whether or not to carry forth with their investment plans. While the comments made by Ben Bernanke, the chairman of the Federal Reserve in front of the House Financial Service Committee was encouraging for investing, the ongoing worries about inflation was heavily playing on the back of the investors.
The NASDAQ index was able to increase slightly but other indexes remained in a neutral position. The Dow Jones industrial average went up by a few points while the Standard & Poor’s 500 went down by a few points. The tech heavy NASDAQ as earlier mentioned was able to gain slightly. At the end of the day NASDAQ had gone up by 0.4 percent
The investors, it seems, are waiting for the modified reading on the fourth quarter Gross Domestic Production and the final day of the Fed head’s congressional testimony.
On the 27th the trading started off on a low note as the investors were pulled back from investing as a result of the very weak reports that were coming in about the housing and manufactured goods. The almost record high oil prices and a record low of the dollar when compared to the Euro were some of the other factors which played on the investors minds. But the early losses were wiped out as a result of a couple of mid-morning incidents that took place. These two incidents not only helped in erasing the early morning loses but also in helping the stocks go higher. It seemed as if the day might end on a good note until late in the day when sluggishness set in and wiped out most of the gains.
Freddie Mac and Fannie Mae shares are some of the shares which went higher on the news that the mortgage lenders are to find restrictions in the size of their portfolios removed as on the first of March. This would mean billions of dollars would be free for investing in the housing market.
The investors were also glad to hear about Bernanke’s testimony before the House Financial Service Committee where he reaffirmed the statements that Fed has come up with in the past few weeks. It was quite obvious from his statements that the Fed was prepared to go forward with its interest rate cuts to get the economy to a state of stability. He however admitted that turbulences that are there in the housing and credit market is going to be a big hurdle that Fed will have to overcome to go forward with its current economic outlook. Bernanke also acknowledged the fact that chances of inflation are very high at the moment.
The Federal Reserve is expected to decrease the Fed funds rate when it meets on the 18th of March. They are expected to cut this important short term interest rate by almost half percentage point.