Market players had a full plate this week - not only were economic indicators abundant but the build up to the FOMC meeting generated excitement - then there was the 50 basis point cut in the federal funds rate. Whew!

Half of the week's reports were released before the end of the FOMC meeting. This means that Fed officials were able to take them into account in their policymaking decision. A couple of indicators were not wholly known by Fed officials, but preliminary or partial data on the NAPM survey and the number of hours worked in the factory sector probably were also factored in their decision. The Fed didn't have complete information on the employment situation.

Immediately following the Fed's rate cut on Wednesday, market players began looking forward to determine whether the Fed would act again before the next FOMC meeting on March 20. Some prognosticators, including former Fed governors, indicated that this was clearly possible by the wording in the Fed statement. Market players began factoring in another rate cut. But the nonfarm payroll figures derailed them. The underlying data does not show a lot of strength, but the headline payroll figure suggested a sharp rebound. Perhaps market sentiment will shift again after the weekend when market participants have time to reflect on the meaning of the comprehensive employment report. After all, the unemployment rate did rise to its highest level since September 1999. And to rely on construction jobs in the deep of winter as the major source of payroll gains is ludicrous!

It is too early to tell whether the Fed will need to act aggressively and cut rates before the next FOMC meeting. In any case, the January employment situation would not prevent such action. But Fed officials will continue to monitor consumer confidence (which by the way fell further in January) and retail spending. January auto sales were upbeat, but keep in mind that this offsets miserable December data. On the whole, the degree of Fed aggression remains in question. Next week won't help given the meager set of economic indicators on the docket.