Katrina and American Business

It will take some time for the full economic effects of Katrina to sort out.  The smart money is currently on reduced second quarter economic growth, a higher unemployment rate, a higher inflation rate and increased consumer prices across the board (due to higher energy and raw material prices).  So why is the stock market up??  Some argue the government and private money that will be used to rebuilt will be, in essence, a giant urban renew plan, creating a economic stimulus with positive, leveraged ripple effects in the larger economy.  Is this why the market it up?  No, traders are believe that Katrina may cause the Fed to slow increase interest rate increases.  We are too dependent on the discretionary, quarter to quarter decisions of the Fed.