An Offer the Fed Refused

Have you ever been to a movie that’s been hyped for months … and then it’s a dud?

I have.

That’s what this week felt like for U.S. stocks.

The buildup to the Federal Reserve’s announcement (and several other key economic and earnings reports*) turned out to be much ado about nothing. As of midday Friday, almost all of the S&P 500’s gain for the week happened in the three trading hours after the Fed’s Wednesday afternoon announcement that it would stand pat on short-term rates.

Despite a growing chorus of concerns that inflation risk is picking up while the economy is in no danger of stalling, the Fed refused to budge, making a rate hike in December extremely likely. (Click here for more on the Fed’s non-action from Jim Pearce, Personal Finance’s chief investment strategist.)

We were looking forward to a rate hike if only because it promised to spur some good old-fashioned panic-selling, allowing us to snap up bargains. At the very least we’d hoped for a return to short-term volatility that could help the market shake off the cobwebs caused by the share-price stagnation we’ve experienced of late.

But that’s OK. We’re still finding plenty of fantastic stocks to recommend.

As Mark Twain once said about the weather in New England: If you don’t like it, wait a few minutes. Unforeseen events will hit the financial markets soon enough, and we’ll be there through every twist and turn, helping you find ways to meet your investment goals.

In the meantime, if you’re looking for potential market-shifting dates to watch for the rest of the year, circle Nov. 8 (Election Day) and Dec. 14 (our next chance for a rate hike). Those could be major inflection points, to say the least.


*Interestingly, existing home sales defied the experts and fell 0.9% in August, following a 3.2% drop in July. If this trend continues, it could confirm that the economy is slowing; on the other hand, after a steady increase in home prices, this blip in demand could be that buyers are waiting for the market to cool in the fall and winter. We’ll keep a close eye on this one.