Is the glass now half full?
The upward trend in the markets continued from the previous few weeks amid optimism that a bottom might have been reached (especially on the NASDAQ). Adding to this was the FOMC's surprise rate cut on Wednesday, which lowered the federal funds rate to 4.50 percent. The Dow and NASDAQ responded with near-record rallies despite some continuing somber earnings reports by some high profile companies. The week closed with a nearly 10% gain for the NASDAQ.

The FOMC's move may be what investors look back to as the turning point for the economy and for equity markets in general. While the economy is still showing signs of fragile growth, investors are hoping that after a dismal first quarter, the economy will have something to look forward to.

Treasury trauma
In the past few months, investors fled to the Treasury market while stock prices were tumbling. As stock prices continued their recent rise this week, the bond market lost ground. While mid-week brought a surprise FOMC rate cut, and led to yields dropping like a stone, the rest of the week was pretty much a downer for Treasuries. Investors shifted money back into the stock market, and in addition, Treasuries continued to compete with more attractive corporate and agency securities. Thursday brought the worst trading day of the year for the Treasury market, as investors became concerned that the stock market may be turning a corner toward growth again, bringing new fears of inflation and less chance of further rate cuts from the Fed.