World financial markets are calmer, with many stock indexes higher after Monday’s brutal global selloff. On Wall Street, the Dow Jones Industrial Average gained almost 2 percent in the morning. Many investors now are looking to see what happens at the U.S. Federal Reserve board’s meeting.
After the New York Stock Exchange opened on Tuesday morning, Peter Cardillo, the chief market economist for the Rockwell Global Capital investment firm, was guardedly optimistic.
“The markets are trying to rally this morning.Obviously, we are going to have an anemic [weak] bounce until we hear from the Fed [Federal Reserve]. I think all eyes are pointing to the Fed’s communiqué this afternoon," said Cardillo. "Hopefully they will try to calm the markets.”
The policy-making committe of the Fed, the United States’ central bank, is holding a regular meeting Tuesday.
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In tough economic times the Fed often tries to stimulate growth, and investors around the world sometimes base their market decisions on what the Fed does.
Cardillo says the biggest task facing the Federal Reserve is convincing investors that the economy is not headed for a recession.
“And also perhaps maybe hint at some further stimulus, perhaps taking away the interest on reserves and that would help them stimulate more loans and keep liquidity floating within the system… and we can get into some sort of consolidation process,” Cardillo added.
Cardillo doubts the American economy is going into a recession, yet is certain that fear will continue to play a major role in the coming days in how global markets act.
“And you could see the fact that the price of gold continues to make new record highs, going up sharply over the past few days just equates with the fear factor," said Cardillo. "And that fear factor means that people have lost confidence in the lawmakers to address issues that could be negative for economic activity.”
The rally on Wall Street Tuesday morning follows gains in some European markets. Most stock markets in Latin America also saw share prices rise. In Asia on Tuesday, major indexes fell by 2 percent or more, although many saw buying late in the day that cut some of the losses.