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Market Comentary: Rates Cut Again

October 8, 2008 – 8:16 pm

The Federal Reserve and four other central banks cut interest rates by a half-point with the notion of restoring faith in the market and to help put an end to the global financial crisis.  The central bank said in a statement that the market turmoil posed a further threat to an already shaky economy.  Stocks still headed lower during the early hours of trading.

Investors did receive some good news from the housing industry.  The National Association of Realtors said pending home sales for August jumped unexpectedly, rather than falling 1.8 percent as had been predicted.  Pending sales, which reflect signed contracts, rose 7.4 percent in August to 93.4 from an upwardly revised reading of 87 in July.  This news created an initial spike in stocks; however the weight of the credit crisis took over and threw stocks in the red once again.

We are in volatile times where speculation and emotions have taken over the market.  Expect a bleak retail Christmas season; already many retailers have cut forecasts for the remainder of the year.  Your best bet is to have cash on the sidelines and be in defensive plays such as large cap consumer staples.

Good Trading
Steve Peasley

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