Stock Market Commentary for Wednesday, May 4, 2005

Tuesday was focused almost exclusively on waiting for the Fed FOMC announcement and then bouncing around in reaction to the statement.  The Fed raised the fed funds target rate as expected, but is will take a few days for the market to fully digest the FOMC announcement and for the dust to settle.  Traders and speculators overreact to FOMC announcements far out of proportion to the actual economic impact of the Fed action itself.  We must wait for that overreaction and the resulting counter-reactions to dissipate.

Nasdaq trading volume was moderate (1.88 billion shares), and breadth was modestly positive, with 1.08 gainers for each loser.  This was a "treading water" market.

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-- Jack Krupansky