Everybody, keep doing the twist!
Fed Chairman Ben Bernanke will be announcing as much during a 2:30 p.m. EDT press conference. Minutes from the two-day Federal Reserve policy meeting were released in advance of Bernanke's speech, detailing the Fed's $267 billion extension of Operation Twist. The plan sells short-term notes while buying long-term bonds in an attempt to increase spending now to artificially lower future borrowing costs.
In addition, the Federal Reserve plans to keep rates low through 2014. Since inflation couldn't appear further away, combined with the disastrous European Central Bank rate hike in July last year, this is sensible policy all around.
So why are markets not soaring? The Fed is essentially not making things worse by extending Operation Twist and low rates are just continuing the status quo. Investors are clamoring for new stimulus, and although the Fed reiterated it was prepared to act if the economy weakens further, today's actions won't move the economy decisively forward.
That said, let's take a closer look at how the three major indexes are faring.
|
|
|
|
---|---|---|---|
Dow Jones Industrial Average |
(36.10) |
(0.28%) |
12,801.23 |
Nasdaq |
(2.81) |
(0.10%) |
2,926.95 |
S&P 500 |
(3.14) |
(0.23%) |
1,354.84 |
Source: Yahoo! Finance.
The major U.S. indexes turned sharply sour as the press release was made available, but have since made up those losses, with the Nasdaq leading the charge. Although there was a strong chance for the market's "fear index" to reverse course from its seemingly perpetual decline, the VIX
On the Dow, Procter & Gamble is down over 3% after its second guidance cut in as many months, thanks to poor demand in Europe, the U.S., and China. Management is aggressively refocusing on its key products and its development pipeline, but a turnaround is likely over a year away. P&G isn't vanishing, but committed investors may only have the 3.6% dividend to comfort them over the coming quarters.
Financials would have benefited the most from additional Federal Reserve action, but Dow component JPMorgan's
Mortgage REITS are strongly susceptible to the Fed's whims, and Annaly Capital
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