MENLO PARK, Calif. (CNN/Money) -
Professional investors analyzed the haiku-like pronouncements of the Fed's Federal Open Market Committee Tuesday afternoon. Then they yawned.
A flat-to-down market that earlier in the day danced around Dow 10,000 went flatter-to-lower (with the emphasis on lower) for the rest of the session.
Get used to it. After a surprisingly stellar year, this market requires not just good news, but really good news, and lots of it, in order to go up considerably.
More on the Fed
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As I noted here last week, Intel's encouraging mid-quarter update -- coupled with an embarrassing write-down – wasn't good enough to juice the stock.
Tuesday's upbeat comments by the often upbeat Hewlett-Packard chief executive, Carly Fiorina, weren't enough to goose that company's shares. (See 'Fiorina: Clearly, economy is improving.')
Even the Fed's maintaining its "considerable period" stance -- meaning it doesn't intend to raise rates for a while yet -- wasn't good enough to get people jazzed about stocks.
Still scared
Why?
Recently by Adam Lashinsky
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For starters, the market has come so far in anticipation of the kind of good news we're already seeing. As the Fed noted in its announcement, productivity is roaring, output is growing, and employment is making progress.
But concerns remain. That's why the Fed is maintaining its "accommodative" stance on monetary policy. And it's also arguably why the market is temporarily stalled.
Maxim Group strategist Barry Ritholtz put it well in a commentary he sent to clients before the Fed's decision.
"After three years of negative stock market returns -- and a weak economy for nearly as long -- the Fed can well afford to be patient," he wrote. "It would be prudent to ensure the recovery is sustainable, and not merely a reaction to the extraordinary amount of stimulus in the system. There exists a very real possibility that consumer spending may slow, as the biggest effects of tax cuts and home refinancings fade in the rear-view mirror."
Interestingly, there's at least one careful student of the Federal Reserve who in the past has said the Fed shouldn't wait to see the whites of inflation's eyes before it fires. That student would be Alan Greenspan, who testified before Congress in 1994 "if the Federal Reserve waits until actual inflation worsens before taking countermeasures, it would have waited far too long."
Taking politics out of the equation -- conventional wisdom dictates that the Fed avoids rate hikes in an election year -- it'd be fair to say Alan Greenspan doesn't see the fear of inflation now and isn't convinced the economy is out of the woods.
The market appears to agree.
Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.
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