U.S. stock futures traded lower on Wednesday after one of the biggest single days of gains in history, with markets waiting for an expected half-point rate cut from the Federal Reserve.
It is the rate cut hope that has lifted the global stocks. Stocks in Europe and Asia extended a global rally Wednesday as rate-cut hopes bolstered investors.
In the U.S., futures declined a day after the Dow Jones industrial average posted its second largest single-day point gain ever.
In a daily Market commentary Alfred Goldman of Wachovia Securities comments on the Market opening by saying the following.
"First, a quick look at yesterday. We had a dramatic melt up and the power shown tells us we have more to come short term. Our short term indicators are very positive. Investors Intelligence for the week ended 10/22/08 showed 22.2% bulls and 54.3% bears, an 18-year record. The NSYE short interest as a percent of total outstanding shares was 4.63% in its latest read the end of Sept. 2008. That's a 13 1/2 year high. Cash levels remain very bullish - money market mutual funds are 40% of the total value of all NYSE and Nasdaq stocks and total MZM is 86%. These are record levels.
"It was very impressive yesterday that the Dow rose 900 points on the same day that Consumer Confidence fell to an all-time low. This says the market was deeply oversold. We look for the Fed to cut interest rates by 50 basis points. Selling before that news at 2:15 ET leaves room for a victory celebration. We believe momentum says the market is going higher short term and will rally after the presidential election, no matter who wins, as a big uncertainty will be out of the way."
