There is some sunshine in the stock market today, but there are also lots of rain clouds. Investors are confused and frustrated. Yes, there were lots of distortions in the figure due to a dramatic jump in natural gas prices, but it still created concern that the Federal Reserve would now be less likely to aggressively cut interest rates. Then, just to confuse everyone even more, consumer confidence plunged 6.9 points for its fourth consecutive monthly decline. Investors did not know which way to turn so they turned away from the stock market.
Investors are currently reluctant to make big bets on stocks.
They put their toes in the water, but few are willing to make a big plunge. Thus, rallies have been short-lived. But investors also are wise enough not to bet against the Fed and the upcoming tax cut. We fully understand investors angst about what to do and when to do it. They have little conviction about when the economic news will get better.