One of the features that distinguishes a bull market from a bear market is how participants react to news. In upswings, investors either shrug off discouraging information, or at worse show an initial negative reaction, then pile back in. You see the reverse in corrections: securities prices don’t respond to good news, or do so only temporarily.
Yesterday, another bearish pattern asserted itself: investors viewing developments once seen as positive in the reverse light. As the New York Times says it all: “Discussion of a Fed Cut Only Stirs Up Concerns About a Weak Economy.” Investors are suddenly concerned about the information content of Fed moves, and apparently less trusting of the Fed’s ability to pull off a rescue.