If you went to the newsstand Wednesday morning and took a look at the top story in
, this is what you saw:
Fed boosts rates a half-point
Bid to curb inflation may not be the last this year
And as soon as you saw that, in the most mainstream paper in America, you knew that the
Federal Open Market Committee's
half-point rate hike the day before had resolved nothing for the market, that nobody would be fooled, even for a second, that more hikes weren't coming, and that Wall Street's slog wasn't even close to over. There would be more days of anemic trading, more uncertainty. In the weeks ahead, making money would be very hard.
"It seems like it's not going to bottom," said Tom McManus, equity portfolio strategist at
Banc of America Securities
. "The blue-chip tech stocks, which had been showing positive relative strength, have been terrible. I don't think a brief look at a few stocks can help you understand the extent of the damage that may have been done."
Particularly worrisome to McManus is
break, on Friday, below its April 14 low. This is a core holding, a stock that investors actually fled to when the tech market first got hit in early March. To see it wipe out more than $180 billion in market capitalization in less than two months is a frightening thing.
This kind of action strikes at investors' nerves, and with more uncertainty ahead, makes them unwilling to commit capital.
"The unofficial first half of the year, leading up to Memorial Day, has been a clinker," said Charles Crane, market strategist at
Spears, Benzak, Salomon & Farrell
. "Right now, the prevailing attitude is, 'Let's see if the summer is better, but let's not contribute any chips to the betting until we have a little more visibility.'"
It doesn't look like the coming week will do anything to clear the fog. There are very few earnings reports due, and it's still too early in the quarter for companies to either warn that business is bad or brag that it's good. Merger and acquisition activity, though always a wild card, has been tepid, leaving investors to worry about when and by how much the Fed hikes next -- which itself is unclear.
"Right now, the question is really a data-watching one," said Bruce Kasman, chief U.S. economist at
. "A neutral set of reports will give you a 25-basis-point hike in June, and some strong numbers raise the prospect that you get 50 back-to-back."
Kasman believes the only way the Fed
hike rates at the June 27-28 meeting is if it sees some reports that strongly suggest the economy has slowed down. "The Fed has moved away from a gradualist approach," he said. "They're committed to slowing the economy down. They're committed to validating what they started to do."
There aren't -- and this kind of figures -- any really major economic reports due out in the coming week. Revised first-quarter
gross domestic product
comes out on Thursday, and though it could create a brief flare in the market if it changes much from the first take, it's very much a rear-window number and is unlikely to affect the Fed's next decision. Friday brings the
durable goods orders
, a secondary report.