Stock Market's Fed Freak-Out Continues

Stock markets tumbled today as investors sold Federal Reserve Chairman Ben Bernanke's talk of tapering bond-buying. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) crashed at the open of trading and is down a full 351 points, or 2.32%, as of 3:25 p.m. EDT. The S&P 500 (SNPINDEX: ^GSPC  ) has lost 2.5% of its value.

Tapering is the code word investors are using for the Fed's slowing-down of its $85 billion-per-month bond-buying program intended to keep interest rates low and goose the economy. Bernanke didn't give a timetable for this tapering, but he said the Fed could slow buying later this year, and there's speculation that the program could end entirely next year. 

Before you go selling every stock you own to buy rations for your economic bomb shelter, remember why the Fed would slow bond purchases. The Fed started the program to keep long-term interest rates low and encourage investors to bid up stocks and prompt businesses to borrow money to expand. The ultimate goal was that the money would trickle down into the economy in the form of lower unemployment. It's the Fed's view that unemployment is slowly falling and that it will soon be time to take off the training wheels and allow the economy to operate with fewer stimuli.

So the Fed would taper bond-buying because the economy is doing well -- not the opposite. For long-term investors, that's great news, although we'll likely see more daily fits and starts on Wall Street. Look at these as buying opportunities, because the Fed is actually bullish on the state of the economy, and you should be, too.

The market freak-out has sent all 30 Dow components lower today, but two stocks have been hit particularly hard. Intel (NASDAQ: INTC  ) is down 3% today, but it's just beginning to gain traction in the mobile market, and with 14 nanometer chips due out next year, it could be a big winner in smartphones as well. The stock trades at just 12 times trailing earnings, and a 3.6% dividend yield is better than 10-year Treasuries and provides great upside for investors.

The other stock to take note of is Disney (NYSE: DIS  ) , which is down 3.5% today. If the Fed is right and the economy is improving, that's great news for Disney, because more people will shell out to see its movies and attend its theme parks. Yesterday, I highlighted why I think Disney is still in prime position to grow despite a changing media environment, and that thesis only gets better if the economy improves.

It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch, as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.

The market can go crazy on a daily basis, and keeping a cool head is critical on days like this. The sell-off was caused by the Fed, but the Fed is bullish on the economy. For investors, that's great news -- no matter what Mr. Market says today.


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