Having benefited for so long from Fed policies, REITs are hostage to fears of a further Fed interest rate increase.
"The market did not evidence a rip-roaring response to the ninth Fed interest rate cut this year," said Alan Ackerman, chief market strategist at Fahnestock & Company.
The yield on the Treasury's two-year note, another barometer of expectations about Fed interest rate moves, was at 3.02percentt, up from 3.00percentThursdayandand 2.44percentt a week ago.
Treasuries Move Higher (By Reuters) -- Treasury bond prices gained yesterday after the Federal Reserve chairman, Alan Greenspan, said the economy was near a standstill, raising hopes for a sharp Fed interest rate cut next week.
Investor comfort with the Fed is reflected in the decline of the yield on the two-year Treasury note, which is sensitive to expectations of Fed interest rate moves.
Jeffrey M. Applegate, the chief United States strategist at Lehman Brothers, said that based on the history of Fed interest rate cuts back to the early 1970's, the stock market has reached a bottom, on average, about three months after the first rate cut.
The government's report that sales of new homes fell 5.8percentt in April offered evidence that six Fed interest rate increases since June were starting to crimp the housing market.
Skousen even says he expects some short-term recovery because of Fed interest rate cuts.
A reinvigorated consumer will force investors to worry again about further Fed interest rate increases.
The current uncertainty about Fed interest rate policy is causing widespread uncertainty and not a small amount of misleading advice.
