USMarketView

November 2, 2007

Friday, the second day following a Fed Fund rate cut, the indices eked out small gains. The S&P500 closed up .08 percent, the DJIA rose .20 percent and the NASDAQ led with a plus .56 percent.

While this small recovery – after Thursday’s steeper than minus two percent losses – may be disappointing, it is, nevertheless, in line with the record of the thirteen previous Fed Fund cuts.

Consider the data in the following table. It summarizes the number of positive and negative changes, and their median values, two trading days after cuts in the Fed Fund rate:

Positive Closes Negative Closes

Index # Median # Median

DJIA 4 + .40% 9 - 1.03%

NASDAQ 5 + 1.65% 8 - 1.09%

S&P500 4 + .30% 9 - .85%

Negatives are about twice as common as positive changes, and with the exception of the NASDAQ, in the minority of cases, when there are gains, these are less than half the median decline.

In sum, Friday was not a bad day. While the indices were only slightly positive, they did better on this second day after the Fed rate cut than in nine or (eight for NASDAQ) of the previous Fed actions since January 5, 2001.

Posted on November 3.

This entry was posted on Saturday, November 3rd, 2007 at 12 102007000000Sat, 03 Nov 2007 22:32:27 +0000 and is filed under Market Report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.