Are Stock Market Investors Being Fooled by a Fed Bluff?

Today’s FOMC minutes crushed index ETFs after solid gains yesterday

Index ETFs have reversed yesterdays gains and more after today’s FOMC minutes sparked fear in investors.  The SPDR S&P 500 ETF (NYSEARCA:SPY) lost 1.24%, the SPDR Dow Jones Industrial Average ETFs (NYSEARCA:DIA) lost .78%, the PowerShares QQQ Series 1 ETF (NASDAQ:QQQ) lost 1.54% and the iShares Russell 2000 Index ETFs (NYSEARCA:IWM) lost 1.86%.

Today’s FOMC Minutes were not pleasurable for investors, to say the least, likely because the FOMC illustrated differing perspectives on quantitative easing and suggested possible QE changes as early as March.  Translation: the Fed might soon take away the punchbowl soon, and the punchbowl addicted markets and investors did not and will likely not like it.

In that respect, I guess it is not too surprising that markets dropped over 1% today, as we all know the difference between a Fed QE field day and a Fed QE let down.  Today qualifies as a Fed QE let down, which (hopefully) indicates that the US economy is improving.  But, considering the rest of today’s news, I am not too excited.  More on that in a moment…