Sam Collins

What Will the Market's Next Move Be?

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Financial stocks took a beating yesterday, and they dragged the rest of the market with them. It was the worst day in a month for the market, with the Dow Jones Industrial Average (DJI) losing more than 1%.

The Dow decline was led by Bank of America (BAC), down 5%, JPMorgan (JPM), off 3.4%, and General Electric (GE), off 4%.

Regional banks fell 4.2%, diversified banks fell 5.6%, and diversified financial firms fell 4.4%.

CIT Group (CIT) fell 19% after delaying the filing of its quarterly report, and MBIA (MBI) was clobbered with a 13% loss following a downgrade by JPMorgan.

Second-quarter productivity increased by 6.4%, which was better than most analysts expected, and the strongest since Q3 2003.

And there was another surprise: Unit labor costs during Q2 2009 fell 5.8%, the sharpest drop in eight years.

However, neither report seemed to have an impact on stock prices.

This afternoon's FOMC announcement on interest rates will be the focus of everyone's attention. The consensus is for no change in rates, but investors will be looking for any comments on future assessments of the economy by the Fed governors and for any hints of when the Fed plans to end its easy-money policy.