- QE3 rally halted- After last week's Federal Reserve inspired surge where each U.S. market gained at least 2%, stocks opened lower Monday. The selling pressure might not last long though as investors are ready to profit off of the Fed's latest moves. "It looks like we need to take a small breather after the sizable rally that we've had," Randy Frederick, managing director of active trading and derivatives at Charles Schwab Corp., told Bloomberg News. "There's the potential for a small pull-back, but I think we will move back into the bull territory later in the week unless there's an unexpected negative news event."
QE3 rally
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Stock Market Today: These Stocks Are Still on a Hot Streak
The major headlines in the stock market today include Europe putting a stop to the QE3 rally, another negative manufacturing report and a couple of stocks continuing to soar.
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QE3 Becomes QE Forever
Welcome to unlimited quantitative easing, or QE Forever.
The U.S. Federal Reserve goosed equities, Treasury yields, gold, silver, oil, platinum, palladium and investor sentiment on Thursday when it announced additional stimulus to spur economic growth.
The central bank said it will continue to buy mortgage-related debt and other securities until the job market shows significant signs of improvement so long as inflation remains tame.
"The market got what it wanted. Stocks immediately shot up," James Meyer, chief investment officer at Tower Bridge Advisers told Reuters.
In fact, the markets got more than expected.
As part of the Fed's new scheme, a marked difference from the first two rounds of QE, it will buy $40 billion of mortgage debt per month. Additionally, the Fed reiterated its stance of keeping interest rates at historic low levels, extending the time frame out until at least the middle of 2015.
"This is definitely a significant shift in FOMC policy," Julia Coronado, chief economist for North America at BNP Paribas in New York and a former Fed economist told Bloomberg News.
Plus, the Fed said it would continue Operation Twist, its action to bring down long-term interest rates.
Collectively, the Fed moves will flood some $85 billion a month into the struggling U.S. economy for the rest of 2012.
The Fed has always set a determined amount of Fed purchases. This time, however, it let America know that easing will endure and no tightening will occur until confidence recovers.
That's why QE3 is a game-changing move for the U.S. economy.
The U.S. Federal Reserve goosed equities, Treasury yields, gold, silver, oil, platinum, palladium and investor sentiment on Thursday when it announced additional stimulus to spur economic growth.
The central bank said it will continue to buy mortgage-related debt and other securities until the job market shows significant signs of improvement so long as inflation remains tame.
"The market got what it wanted. Stocks immediately shot up," James Meyer, chief investment officer at Tower Bridge Advisers told Reuters.
In fact, the markets got more than expected.
As part of the Fed's new scheme, a marked difference from the first two rounds of QE, it will buy $40 billion of mortgage debt per month. Additionally, the Fed reiterated its stance of keeping interest rates at historic low levels, extending the time frame out until at least the middle of 2015.
"This is definitely a significant shift in FOMC policy," Julia Coronado, chief economist for North America at BNP Paribas in New York and a former Fed economist told Bloomberg News.
Plus, the Fed said it would continue Operation Twist, its action to bring down long-term interest rates.
Collectively, the Fed moves will flood some $85 billion a month into the struggling U.S. economy for the rest of 2012.
The Fed has always set a determined amount of Fed purchases. This time, however, it let America know that easing will endure and no tightening will occur until confidence recovers.
That's why QE3 is a game-changing move for the U.S. economy.
To continue reading, please click here...
How to Play the QE3 Rally
QE3 was finally announced by the U.S. Federal Reserve after today's Federal Open Market Committee (FOMC) meeting.
Federal Reserve Chairman Ben Bernanke announced that the Fed will launch a new bond-buying program to purchase $40 billion in mortgage-backed securities each month. Interest rates will be kept at 0% through mid-2015, six months longer than originally planned.
Together with the rest of the remainder of the Operation Twist program, the Fed will be buying $85 billion in bonds for the rest of 2012. The new bond purchases will start tomorrow (Friday).
Bernanke and the FOMC decided in an 11-1 vote to use unconventional monetary policies once again to bring down unemployment that has been stuck above 8% for 43 months and to boost an economy that grew at a lethargic 1.7% rate in the second quarter.
But this new program, compared to previous rounds of easing, has a new twist.
QE3 is an open-ended program to buy bonds until the economy improves. The Fed said in its statement earlier today that if the labor market does not improve it will continue purchases and undertake additional measures if needed.
Now that QE3 is here, will this new measure actually boost the economy and spur job growth?
Catherine Mann, a Brandeis professor and former Federal Reserve economist doesn't think so.
"The Fed continues to want the economy to grow faster and specifically, to grow more jobs, but the ability of QE to do that is extraordinarily limited," she told CNN. "We know that QE reduced interest rates, but we also know that has not led to more construction, more mortgages, more business investment, or more lending. Since it hasn't done any of that, it probably hasn't created jobs either."
Federal Reserve Chairman Ben Bernanke announced that the Fed will launch a new bond-buying program to purchase $40 billion in mortgage-backed securities each month. Interest rates will be kept at 0% through mid-2015, six months longer than originally planned.
Together with the rest of the remainder of the Operation Twist program, the Fed will be buying $85 billion in bonds for the rest of 2012. The new bond purchases will start tomorrow (Friday).
Bernanke and the FOMC decided in an 11-1 vote to use unconventional monetary policies once again to bring down unemployment that has been stuck above 8% for 43 months and to boost an economy that grew at a lethargic 1.7% rate in the second quarter.
But this new program, compared to previous rounds of easing, has a new twist.
QE3 is an open-ended program to buy bonds until the economy improves. The Fed said in its statement earlier today that if the labor market does not improve it will continue purchases and undertake additional measures if needed.
Now that QE3 is here, will this new measure actually boost the economy and spur job growth?
Catherine Mann, a Brandeis professor and former Federal Reserve economist doesn't think so.
"The Fed continues to want the economy to grow faster and specifically, to grow more jobs, but the ability of QE to do that is extraordinarily limited," she told CNN. "We know that QE reduced interest rates, but we also know that has not led to more construction, more mortgages, more business investment, or more lending. Since it hasn't done any of that, it probably hasn't created jobs either."
To continue reading, please click here...