Last Friday, the performance of U.S. stock market was still weak, despite the better-than-expected U.S. consumer confidence index. The effect brought in by the good economic factor was very limited, investors are still concerned about the uncertainty of the European political, economic situation and prospects, resulting in the continuous heating-up in the market risk aversion. Even if there are some good factors, investors cannot devote themselves into the U.S. stock market. The Fed’s optimism on the economy further dispelled the market expectations on QE3 and other stimulus measures, investors also felt confused on the economic recovery prospects. Lack of confidence in the economic outlook, the major U.S. stock indexes continuously retreated, funds continued fleeing away from the high-risk assets to the safe-haven assets. As a result, in view of the whole last week, the Dow Jones Industrial Average was down 1.7%, the Nasdaq Composite index cumulatively fell of 0.8% and the Standard & Poor’s index lost 1.1%.
In the eyes of the Fed, the prospects for the recovery of the U.S. economy appear to be relatively bright. However, from the perspectives of the investors and taking account of the results of various economic data, the U.S. economic recovery is not solid and the prospects are still not clear enough. This is also where the divergences between the investors and the Fed lie.
Although the consumer confidence index released by the Fed last Friday was better than the market consensus expectations, but played a limited role in boosting the U.S. stock market. In fact, from the perspective of the investors, they hope that the Fed is able to introduce more economic stimulus policies in order to enable the job market and real estate market to continuously move toward the right direction. Unfortunately, the Fed’s optimism punctured these hopes one by one. As lack of optimistic expectations to strongly support the U.S. stock market, the rising power will appear inevitably week, coupled with early profit-taking selling pressure, the short-term adjustment pattern may have formed.
The Fed will announce a group of important economic data, including the CPI in April, core retail sales, housing starts in April, etc. These data will provide the basis for the market investing behaviors and the Fed’s policy direction.