After a brief rally, AP Business Writer Stan Choe reports in The Boston Globe that the markets are once again sliding back downhill:
“The Dow Jones industrial average fell 413 points, or 3.7 percent, to 10,827in morning trading Wednesday. That erased nearly all of its 429 point gain from Tuesday, when the Federal Reserve pledged to keep its key interest rate at nearly zero into 2013.Gold rose $30 per ounce to $1,773 as money poured into investments considered safe. The 10-year Treasury note, which has also served as a safe haven, also rose. Its yield fell to 2.14 percent from 2.26 percent late Tuesday. It had reached a record low of 2.03 percent on Tuesday. A bond’s yield falls when its price rises.
‘Investors are still trying to discern whether it’s going to be a double-dip recession or just a slowdown,’ said Oliver Pursche, president of Gary Goldberg Financial Services.”
With the markets in such a state of flux, it’s hard to pin down what the outcome will be for the broader economy in general, and the New England and New Hampshire economies in particular. But as Choe reports, something has changed, at least as far as the Fed’s concerned.
“As recently as June, the Fed said that the slowing recovery was due to temporary factors, such as high gasoline prices and the disruption to manufacturers following Japan’s March earthquake. But on Tuesday, the central bank acknowledged those factors were only part of the reason that the economy grew at its slowest pace in the first half of this year since the recession ended in June 2009.
The statement ‘was essentially a full admission that the Fed had not fully gotten their arms around the permanence to the weak trends in the economy,’ William O’Donnell, head of U.S. Treasury strategy at RBS Securities, wrote in a report.”
A spokeswoman for the Federal Reserve Bank of Boston declined State Impact’s request for an interview, citing a customary “blackout” following Fed meetings.