December 17, 2008
More often than not, prices continue to increase on the day following a cut of the fed funds rate; today, however, the indices turned down.
The NASDAQ, which had 18 increases to just 9 declines, and until today, scored twice as many gains as losses, dropped -.67 percent. The other two indices, with their 15 positive to 12 negative history, also declined, with the DJIA falling -1.12 percent and the S&P500 off -.96 percent.
Over the last 27 fed fund rate cuts since 1995, the two day after performance for the DJIA is 15 ups versus 12 downs. The NASDAQ, however, has a more encouraging record with a plus 16 and minus 11 price change ratio. Finally, the S&P500 with only a moderate adjustment from its day after performance has 16 higher and 11 lower price changes on the second day following a fed funds rate cut.
DJIA -1.12 percent
NASDAQ -.67 percent
S&P500 -.96 percent