After falling sharply Wednesday afternoon following the release of the minutes of the FOMC’s January meeting, fear of a less accommodative Fed continued to weigh on stocks Thursday.
In recent trading, the Dow was down 0.6%, while the S&P was off 0.9% and the Nasdaq by 1.6%, with the latter weighed down by weakness in tech giants like Intel and smaller names like Tesla.
“If the Fed gets tough, as they’re probably long overdue to do, the market will go down,” says Howard Lindzon, co-founcer and CEO of Stocktwits.com. “When they change policy it’s not going to be a one day hit; it’ll be a month and month after month hit and we’ll be begging for the cash. So that will change the market.”
But despite the market’s anxious reading of the Fed’s tea leaves, it’s probably a long time before the Fed actually starts to reduce its accommodation or merely “vary the pace of asset purchases,” as the January FOMC minutes declared.
In the meantime, and for the moment, Lindzon is “not super bullish but [doesn’t] see a reason to be bearish.”
One reason he remains relatively unperturbed by the market’s recent weakness is the number and variety of stocks recently hitting all-time highs, including Google, Disney, Procter & Gamble, Celgene, Honeywell, among others.
“I definitely don’t feel like you should be chasing stocks here [but] I want to find companies hitting on all cylinders,” Lindzon says. “I fish where the fish are and any great company shows up on the [52-week] high list. Any crummy company eventually shows up on the [52-week] low list.”