International markets have been in a panic the past couple of days, and the US markets are responding this morning. The emergency rate cut by the Fed has been welcomed as stocks have bounced off early lows. Since yesterday, I've been wondering how much US stocks could fall based on poor sentiment, considering how much we've already dropped in January. If corporate earnings really start coming in weak, then I can understand further declines. But on sentiment alone, selling can be furious, but I'm not sure how long it can be sustained.
Hank Paulson says the stimulus is needed to shore up confidence in the markets, and that the economy is still fundamentally strong. That will have to be backed up by data, but he should know better than anyone.
We'll see how the market holds up throughout the day.