With hopes of QE3 temporarily dashed following an uninspiring Fed statement yesterday, investors reacted to negative economic data in a much different fashion than last week. Rewind to one week ago, when markets rallied on the “pro QE3” economic data, which ranged from spiking jobless claims to skyrocketing Spanish borrowing costs. But with the widely-anticipated Fed statement behind us, similar economic data that came out today, which indicated contracting economic activity, wasn’t met with as warm a welcome. The damage? A 250-point tumble for the Dow Jones Industrial Average
Around the Dow
Moving to individual stocks, it should come as no surprise that, on one of the worst trading days of the year, the two worst Dow performers -- Alcoa
Patience is virtue
Iinvestors may not have to wait too long for another Fed-induced rally on abysmal economic data. All it takes is a quick trip to the Federal Reserve website to see that the FOMC meets again at the end of next month, a full two weeks quicker than the previous layoff we just experienced. So, while there will likely be some bumps in the short-term, as investors digest economic data without the mind-bending effects of QE3-mania, it’s important to remember that the Fed plans to “maintain a highly accommodative stance for monetary policy” going forward. And if history has taught us anything, it’s “don’t fight the Fed.”
“Set it and forget it!”
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Brenton Flynn doesn’t own shares of the companies mentioned. The Motley Fool owns shares of Western Digital and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy.
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