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A Hopeful Dow Posts 3rd Straight Gain Before Fed Meeting

John Divine
September 17, 2013

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Despite the hundreds of billions of dollars pumped into the economy since the beginning of the financial crisis, the U.S. economy is stubbornly showing few signs of inflation. In fact, inflation was almost nonexistent in August: The consumer price index advanced just 0.1% last month, a reading that may encourage the Federal Reserve to cut back its stimulus program only conservatively as it convenes tomorrow to debate policy.

The central bank wants to avoid deflation, which encourages consumers to save rather than spend their money as prices fall. Hopeful that the Fed will enact modest stimulus cutbacks tomorrow, the Dow Jones Industrial Average's (INDEX: ^DJI) tacked on 34 points, or 0.2%, to end at 15,529. 

Alcoa's (NYSE: AA) impending exit from the Dow didn't stop the stock from jumping 2% on Tuesday. With just three more days of trading left in the blue-chip index after a 54-year ride comes to a close, shares in the aluminum giant are as volatile as ever. Today's move, for instance, came despite the absence of a clear catalyst. Going forward, it will be interesting to see how Alcoa contains its costs: The company has increasingly been moving facilities abroad in recent years to cut its power expenses. 

American Express (NYSE: AXP) added 1.8% today, keeping alive the stock's five-day winning streak. If deflation e