The Dow managed to gain a ho-hum 890 points on Tuesday (October 28), the second largest point gain for the index this month, and also, by the way, ever. Most analysts agreed there really was very little news on Tuesday to drive such again. It was simply a matter of the same momentum buying that has caused the Dow to experience 18 triple-digit moves in its last 20 trading days coming into play. Bargain hunters kicked things off by driving up the blue-chip index nearly 500 points by early afternoon and momentum buying driving it toward 900 points.

It is really hard to even figure out where to begin for analysts trying to uncover big news events in the current economic environment. On any given day recently, there are a number of financial indicators and sectors that could be news makers in a typically economy. Some important economic moves are easily overlooked however, in the current tumultuous environment.

The consensus Tuesday was that an expected Fed rate cut to conclude its current meeting on Wednesday afternoon was the biggest market mover. Most anticipate the Fed is going to slash rates again as part of the continued surge in interventions to drive the market. Given the poor jobs and retail data the last couple weeks, no rate cut would likely be a devastating surprise to investors and consumers. It would be hard to imagine the Fed not cutting rates if for no other reason than the skittish marketplace expects it at this point.

The Bush Administration also publicly expressed its desire to see creditors aggressively expand their lending operations to enable business expansion and real estate activity. The Administration has been concerned in recent weeks that despite the bailout initiative, some creditors were leery to return to normal lending operations. This is certainly not the scenario preferred by those who support the lending bailout.

Gas prices below $2 – Does that sound like a headline grabber? No doubt anyone would have called the idea insane in mid-July when the national average peaked at $4.11. Yet, just over three months later, gas has creased $2 in some parts of the Midwest. This has definitely been the silver lining, along with some other consumer prices, in the dark economic environment of the last couple months. Oil sits just above $62 – about $85 less than its high in mid-July.

Consumer confidence was reported at its lowest point ever on Tuesday as well. This is undoubtedly big news, accept that its not. For this to have been big news it would have been unpredictable. Most lay people could have suggested consumer confidence is on the same shaky ground as investment markets.

A Euro worth only $1.27, and a Pound at $1.60 – these numbers would surely boggle the mind of anyone using hindsight to see back to early 2008, when a Euro was touching a high over $1.61, and a Pound seemed settled above $2.00. Now, to those who have not made a fortune on the dollar’s gains, these currency ratios are more of a footnote to the fact that the economic crisis has become a global concern.
Regardless of which news event headlines the front page of a particular business or finance media vehicle, the fear and uncertainty of what is to come remains in focus just seven days ahead of the presidential election that most have called the most important in US history.

Market Recap

The Dow started off the week as it finished the last – down. Combined, the Dow shaved off nearly 500 points between Friday and Monday. Tuesday was a different story as the Dow closed up a remarkable 891 points. The strong move Tuesday was a sure sign of the times as the only catalyst was an expected rate cut pending from the Fed. Otherwise, analysts attributed gains to momentum buying after bargain hunters got the ball rolling early. The NASDAQ also gained 143 points and the S&P 91. The dollar surged against the Euro and remains low against the yen. Oil moved back over $62 as gasoline prices continue to fall nationwide.

Neil Kokemuller
Tuesday, October 28, 2008
10:33 PM EST

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University.

Please note: The information provided in this article is intended for informational and entertainment purposes, and not as advice for financial decisions or investments. Actions taken on the basis of the information shared is at the sole risk and discretion of the individual. Currency investment poses significant risk of loss.