Its official, recession is here
Following Japan and the Eurozone, the United States is officially in recession. The National Bearau of Economic Research and its economists determined that in fact the United States is in recession and that it had been since December 2007 just after the housing bubble began to burst.
This announcement prompted Ben Bernanke and Henry Paulson to make statements regarding the response of the FED and Treasury in America’s recession. Ben Bernanke wouldn’t rule out a rate cut but said that they could only do so much. He favored government programs, the recent TARP program and insuring transactions to lower interest rates. Henry Paulson mostly agreed but traders are still pricing in a cut next FED meeting.
Traders smashed the US markets today after a lower open in Asia and the NBER report surfaced. The major indices were all off by more than 7% with the Dow down 7.7% and the NASDAQ and S&P500 down 7.95 and 7.93% respectively. Even though the markets tanked in the final hour, there is some good news to what could have been a horrible day.
At the end of the session the Dow fell to a recent support line. At the bottom the market bounced in the final minutes on huge buying. The last minute recorded 7 Million shares traded in the final minute.
Hopefully the market can find some support tomorrow. The selloff today was likely the result of mild profit-taking mixed with recession fear. I think we bounce tomorrow on an open above the trend.
