Equities hitting the wall in '08 by ProQuest


The Dow Jones Industrial Average and S&P 500 hit all-time highs on Oct 11, 2007. But since then, the Dow, S&P 500 and the Russell 2000 have endured huge volatility and losses ranging from approximately 15% in the Dow to nearly 24% in the Russell. The idea that something has fundamentally changed for the worst in the US economy is gaining traction. But the most recent series of interest rate cuts have softened an already weak US dollar. And with the Fed aggressively cutting rates with Fed Funds futures projecting a 2.5% rate in April, there is no relief in sight for the green back. While a resulting recession is likely to be longer and deeper than anticipated, Peter Kefalas, head of research at Denali Asset Management, is more optimistic based on monetary policy. The degree of aggressiveness that the Fed is undertaking has been enough historically to support a very good upswing in stock prices.

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