Stocks rallied in the United States Thursday, a day after the Federal Reserve’s decision to buy more government securities to stimulate the economy.
Equities have rallied strongly since early September, partly in anticipation of action by the Federal Reserve, which announced on Wednesday that it would purchase $600 billion in Treasuries. The Dow Jones industrial average has gained more than 14 percent in the last two months while the Standard & Poor’s index is up 16 percent.
On Thursday, the Dow was up 219.71 points, or 1.96 percent, at 11,437.84, while the Standard & Poor’s 500-stock index rose 23.10 points, or 1.93 percent, to 1,221.06. The Nasdaq gained 37.07, or 1.46 percent, to 2,577.34.
Wednesday’s reaction to the Fed announcement was muted, although it was enough to send the Dow up 26.41 points on Wednesday to its highest close in two years. On Thursday, as investors absorbed the impact of the announcement, financial markets in Europe and Asia rose, and the dollar weakened.
(Source: NY Times)
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8 Responses
Wow. This is as much fun as monopoly, only with lots more zeroes. I hope we don’t get a “go to jail” card. Actually it might help the economy if instead of investing in securities, they took their brand new money and hired people.
The article didn’t mention that when the Fed “purchases” securities, the money they purchase them with is created on the spot (no more of that messy having to play with paper and ink the way the Germans did in the 1920s).
I wonder if there’s a bracha on seeing the Bank of Israel forced to buy dollars in order to keep the shekel from rising so much (thanks to American currency manipulation – oh I forgot, only sneaky third worlders manipulate their currency – we call it monetary policy). Imagine, the Shekel as a hard currency, and the US Dollar as funny money.
akuperma,
The US dollar remains much stronger against the Euro than it was 2 1/2 years ago. Inflation is NOT a problem today, the problem is DEflation. And most conservative economists promote monetary rather than fiscal policy as a conservative way of promoting economic growth.
#2 just because inflation is not a problem today does not mean it will not happen in the future. Many great investors who know a lot more than economists like Warren Buffett think there will be high inflation in the future.
#2 – about five months ago the Euro was dollar at 1.2 to the dollar, and the yes was around 95 to the dollar. Since then, the EU change policies, basically telling deadbeats (the so-called PIIGS)not to expect bailouts.
The massive printing on money expressed in the bond markets if forcing up the price of bonds (meaning low interest rates, which inflates bond prices), and is creating yet another bubble.
Sooner or later the bubble will burst. The trick for investors is to sell on the day before it bursts.
Yeh the dollar weakened. its dropped the lowest it has been in a very long time. Compared to the Shekel. 3.57!
“#2 just because inflation is not a problem today does not mean it will not happen in the future.”
And if that is the case we will deal with it. In the mean time, deal with today’s real problem rather than tomorrow’s theoretical problem.
“#2 – about five months ago the Euro was dollar at 1.2 to the dollar”
And 2 1/2 years ago the Euro was $1.58.
The truth is, the dollar SHOULD decline. It has long been overvalued and that overvaluation has helped destroy US export manufacturing.
The Fed should be gezunt, but I’m looking to purchase property in Yerushalyim, and this is not helping! I need some strong currency drasha and a ‘exit policy’ and just to briefly raise rates to like 7%, for about a week, so I can close the deal. Then they can go an devalue it again.
You cannot control runaway inflation, you obvious no very little about economic history since the US went off the dollar standard in 1971.