Why did the DOW gain 889 points today?

[Vesayen]

Today, the DOW gained 889 points.

I do not trust financial reporters in the media, nor do I trust the economists that they interview. Not that I think there is any grand conspiracy(there is not), simply that the economy is complex and most of the so called "experts" are wrong so often that I believe that they vastly inflate their expertise.

Which makes your informed opinion as valuable as any of them, at least you are not going to lie about your expertise.

So, any theories on why the DOW made huge gains today?

[Aeson]

Getting ahead of the anticipated rate cut among other things.

[snoopy369]

In a crash market there are always up days (either anticipating things such as Aeson notes, or just deciding yesterday's crash was too far). Huge upswings as well as huge downswings are expected (though far far bigger downswings of course).

[Jon Miller]

I think right now we are seeing a lot of gambling (both low and high).

JM

[Richelieu]

Originally posted by Jon Miller
I think right now we are seeing a lot of gambling (both low and high).

JM

[Agathon]

faith

[KrazyHorse]

Originally posted by Aeson
Getting ahead of the anticipated rate cut among other things.

Why did the rate cut become suddenly more likely today?

[Kidlicious]

People invested in the stock market.

[Berzerker]

volatility aint good, big drop coming tomorrow

[Aeson]

Originally posted by KrazyHorse
Why did the rate cut become suddenly more likely today?

It probably didn't. But that doesn't matter. What matters is how the market perceives the chances...

http://biz.yahoo.com/ap/081028/fed_interest_rates.html

Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon -- their last before the November elections -- to make a fresh assessment of economic and financial conditions and decide their next move on rates. Their decision -- widely expected to be a rate reduction -- the second in two weeks -- will be announced Wednesday.

Betting on a hefty rate cut, Wall Street staged an energetic rally. The Dow Jones industrials zoomed 889.35 points, its second-largest point gain ever.

[KrazyHorse]

Errr....what?

The market knew ahead of time that there was going to be a meeting. Why did it get priced in today instead of prior to today?

[KrazyHorse]

Re: Why did the DOW gain 889 points today?

Originally posted by Vesayen
I do not trust financial reporters in the media, nor do I trust the economists that they interview. Not that I think there is any grand conspiracy(there is not), simply that the economy is complex and most of the so called "experts" are wrong so often that I believe that they vastly inflate their expertise.

[Aeson]

Why does it get priced in at any point? Do we have to break out quotes about the irrationality of the market again?

Yesterday it looked like they were pricing it in, but for whatever reason we got profit taking leading into a panic selloff at the end of the session. Today for whatever reason we didn't get profit taking, instead the run lasted, turning into what looks like a giant short squeeze.

I don't know what info traders have behind the scenes, but traders were talking about rate cuts today, and the market went up. Maybe it's just unfounded rumors, or maybe someone's got some real information. It doesn't really matter though... pervasive talk of rate cuts... market up... as is generally wont to happen when you get that sorta talk.

[Ben Kenobi]

I don't see why liquidity is a problem here. Lower interest rates aren't going to solve the problem.

The market will just give this all back in another week or so.

[KrazyHorse]

Originally posted by Aeson
Why does it get priced in at any point? Do we have to break out quotes about the irrationality of the market again?

Yesterday it looked like they were pricing it in, but for whatever reason we got profit taking leading into a panic selloff at the end of the session. Today for whatever reason we didn't get profit taking, instead the run lasted, turning into what looks like a giant short squeeze.

I don't know what info traders have behind the scenes, but traders were talking about rate cuts today, and the market went up. Maybe it's just unfounded rumors, or maybe someone's got some real information. It doesn't really matter though... pervasive talk of rate cuts... market up... as is generally wont to happen when you get that sorta talk.

My point is that you shouldn't say things like "Getting ahead of the anticipated rate cut among other things. ".

It's a meaningless statement. It is the type of statement which contributes to the impression that there is real reasoning behind day-to-day movements of markets. Sometimes there is a discernible reason behind movements. Most times there is not.