Perusing Yahoo Finance tonight looking for some ‘fun’ logic I found this pearl:
“NEW YORK (AP) — Wall Street has finally come to grips with the fact that the Federal Reserve is going to raise interest rates until inflation is well contained. Now investors will focus on whether those rate hikes are going to pressure corporate profits. There’s very little economic data in the week ahead, which is not necessarily a bad thing. In recent months, Wall Street has shown a tendency to overreact to economic reports, even when analysts say the numbers are insignificant or inconclusive. The Fed’s month-long tough talk on inflation has coincided with a month-long selloff based on inflation fears. Now, however, with the Fed all but certain to raise rates at its meeting at the end of this month, Wall Street’s attention will turn to corporate earnings. This is “preannouncement” season, in which companies issue revised forecasts on their earnings. Preannouncements, which often aren’t scheduled in advance, can be either good or bad, and can send a stock sharply higher or lower.”
It’s Sunday night. One of the largest portals for finance news just posted this comment…so what do you do with it? Do you buy something tomorrow? Sell something? Is this comment meant for stock traders? Bond traders? Commodities traders?
What does “tendency to overreact to economic reports” mean exactly? How do investors “focus on whether rate hikes are going to pressure corporate profits” or not? And if you are able to do this, what then?
I am confused.