Many market players were optimist this morning that a dovish Fed combined with an oversold market and positive seasonality would help to deliver a positive finish to the year. They were even willing to overlook a quarter point hike in interest rates as long as Fed Chairman Powell sent the message that the Fed would stand down and wait for more data before it committed to more hikes.
That was not the message that Powell sent. Powell basically said that there wasn't anything wrong with the economy and the market shouldn't act like there is. He did say there were some signs of slowing, but inflation was actually lower than expected and employment trends continue to look very strong.
The market didn't want to hear it. The market wanted another dose of lower interest rates. It has become addicted to low rates over the past 10 years and when the market is weak there is nothing else that can satisfy the bulls.
In a different environment Powell's comments about the strength of the economy would be quite bullish but in the current environment the only thing that matters is that stocks are acting very poorly. Both the market and President Trump want Powell to address stock prices and not some vague worries about being behind the curve when it comes to inflation concerns.
The end results were new annual recent lows for the S&P 500, Nasdaq, DJIA and the Russell 2000 ETF (IWM) . Powell has now been chairman for seven Fed meetings. The market has been down on all seven Fed days. That is a dismal record for a market that used to love to love the Fed.
Have a good evening. I'll see you tomorrow.