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Credit Insights

Bad News Is Good News Again

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After suffering through disappointing economic indicators (housing starts and existing sales in a nosedive, depressing durable goods orders, and a disheartening GDP revision) and reduced guidance by industry behemoth Intel, last week ended on a strong note. The markets took comfort in Ben Bernanke's assertion that the Federal Reserve will support the economy if it weakens further.

The Fed stands ready to provide additional monetary accommodations through unconventional measures if it becomes necessary. Considering how bad the economic releases were last week, it appears the Fed will be using its unconventional measures sooner rather than later. Once again, bad news became good news for the market as investors rely on the Fed to pump enough liquidity into the economy to attempt to forestall a double-dip recession.

David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.