The only news in front of the markets is the Federal Reserve Board's meeting on May 15. It is widely expected the Fed will lower interest rates, but traders and investors are uncertain as to how big the cut will be.
If the Fed disappoints the Street with only a modest quarter point cut, investors may sell markets down further. Investors may wish to take defensive action ahead of the meeting. The Federal funds futures markets, which have correctly predicted the Fed's interest rate cuts in the past 33 out of 35 meetings, suggests the Fed will only cut rates one-quarter of a point. If correct, markets could correct sharply. A review of individual indices supports the theory of possible further share price erosion.
You know how the game works, right? 1/4 point cut may be better than a 1/2 point cut. 1/4 point cut means the economy is getting better faster than the fed thought. 1/2 point cut may mean we are in very deep trouble.