On Tuesday September 21st, the Federal Reserve will meet to decide whether or not to continue putting money into the economy by buying bonds, a strategy of the monetary policy known as quantitative easing. Since the Fed rate has already been lowered to near zero (.25 percent), easing interest rates are not an option for economic recovery. Instead, earlier this year, the Fed decided to buy U.S. debt in order to get money flowing. The purchase of additional debt could be the next step they take as they attempt to spur true economic recovery. Unfortunately, since quantitative easing increases demand but not supply, it can lead to inflation.
On the eve of this meeting, the Dow Jones Industrial Average gained 145.84 points to 10,753.69 while the Nasdaq rose 40.22 points to 2,355.83. The S&P 500 climbed 17.12 points to 1,142.91. This brought the Dow to its highest close since May 13th, 2010 when it closed at 10,782.95. The S&P and the Nasdaq are also at 4-month highs.
European markets were up on Monday while Asian markets were mixed.
Stocks in the news: BP Plc (NYSE: BP), Yahoo! Inc (NASDAQ: YHOO), Johnson & Johnson (NYSE: JNJ), International Business Machines Corp (NYSE: IBM).
