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The stock market today sank lower at the open after stimulus expectations fueled a rally Friday.
The U.S. Commerce Department reported Friday that second-quarter gross domestic product (GDP) expanded at a 1.5% rate, which was slightly higher than estimates, but still far too slow to keep up with inflation.
Investors accepted the number as more ammunition for the Fed to make QE3 a reality when the Federal Open Market Committee (FOMC) meets Tuesday and Wednesday. The Dow Jones topped 13,000 for the first time since May.
What comes out of this two-day policy meeting should be an indication of whether or not the Fed will take any further action either now or at Jackson Hole later this month. QE2 was announced at the Jackson Hole meeting in 2010 and many experts think this will be the case again this year.
If no action is taken it will surely upset the markets.
European Central Bank (ECB) president Mario Draghi last week made clear that he will do all he can to prevent a collapse of the euro, and he is not afraid to inject more stimulus into Europe's economy.
Draghi stated, "The ECB is ready to do whatever it takes to preserve the euro."
After the Fed meets the ECB will be in the spotlight, with its Governing Council meeting in Frankfurt on Thursday.