Oil, Fed Causes Rally
August 6th, 2008 | by george |Steadily decreasing oil prices and positive signals from the Federal Reserve have caused a rally on the Dow Jones, rising at the fastest rate since April 10 of this year. Investors feel that with oil prices falling, and no interest rate hikes by the Fed in sight, the US recession is going to be a light one. The Dow Jones rose almost 3% to 11615.77 points. European stock indexes responded positively to the Dow Jones’ performance, with all major indexes rising.
Plunging oil prices and reassuring signals from the Federal Reserve combined to spur hopes that the worst could be over for stocks, driving the Dow Jones Industrial Average on Tuesday to its sharpest one-day gain since April 1.
This was hardly the first time since the bear market began in October that stocks have staged a strong rebound. Skeptical investors warned that this could be another false start: A potential recession is looming, the financial system is in disarray and housing prices continue to fall amid mounting foreclosures.
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