Stocks plunge after Fed announces stimulus steps

[I AM NOT THAT GUY 5,715]

NEW YORK (AP) - The Federal Reserve did what investors expected Wednesday—it said it would buy Treasury bonds to help the economy. But stocks fell anyway. The reason? The Fed made it clear that it thinks a full economic recovery is years away.

Investors bought Treasurys because of concerns about the weak economy. The yield on the 10-year Treasury note fell to a record low of 1.86 percent from late Tuesday's 1.93 percent.

And the price of oil continued its slide on expectations that there'll be less demand for energy because of the economy. Crude fell $1 to $85.92 on the New York Mercantile Exchange.

The industries that fell the most Wednesday were the ones that have suffered amid worries about the economy this summer: financial and industrial companies and those that sell non-essentials to consumers. Retailers were among the biggest losers.

Wednesday's trading recalled the sharp losses the market has suffered this summer as investors feared that the country was heading toward another recession.

The Fed said after a two-day meeting that it would buy long-term Treasurys and sell short-term ones to help the economy regain momentum. It surprised investors when it said it would include more 30-year bonds in its purchases than expected.

"It's being viewed as perhaps an admission that this is a longer-term issue that the U.S. economy is facing and not one that's going to be solved over a couple of years," said Oliver Pursche, president of Gary Goldberg Financial Services.

The major indexes fluctuated as they often do after major Fed announcements. The losses accelerated in the last hour of trading.

The Fed said it would buy $400 billion in 6-year to 30-year Treasurys by June 2012. Over the same period, it planned to sell $400 billion of Treasurys maturing in 3 years or less. The move is intended to drive down interest rates on long-term government debt, and could lower rates on mortgages and other loans.

Those purchases are intended to send long-term rates down—Treasury yields fall when the bonds are in demand. The inclusion of more 30-year bonds than expected means the Fed saw the need to keep very long-term rates lower for an extended period. And that took investors by surprise, Pursche said.

"When the Fed decides to take this type of action, it's because things are serious," Pursche said.

There are also concerns about problems overseas, including the debt crisis in Europe that investors believe could affect the U.S. The International Monetary Fund said Wednesday the global financial system is in its most vulnerable state since the 2008 financial crisis. In a semi-annual report, the IMF said the risk to banks and financial markets has grown in recent months.

"That is perhaps a recognition that the Fed is running out of firepower and resorting to some arcane techniques resurrected from the vault of history," said Lawrence Creatura, portfolio manager at Federated Investors.

Investors may also doubt the Fed's ability to drive down Treasury yields much more from their current levels.

"Let's face it: with a 10-year Treasury offering 1.90 percent, there's not a whole lot of room for there to be a major impact," said Mark Lamkin, the head of Lousiville, KY-based Lamkin Wealth Management.

While initial investor reaction to the decision was negative, it's common for stocks to change direction in the minutes, hours and days following an important Fed announcement, said Phil Orlando, chief equity market strategist for Federated Investors.

"It's not unusual for the market to drop a percent or two after the decision, then it may rally the next day, then it may fall again. People are confused, they don't really know how to settle it in," said Orlando.

http://www.breitbart.com/article.php?id=D9PT67UO0&show_article=1

[MyLittlePony 340]

Obama fell one short of a happy meal.

[Dakine10 5,452]

NEW YORK (AP) - The Federal Reserve did what investors expected Wednesday—it said it would buy Treasury bonds to help the economy. But stocks fell anyway. The reason? The Fed made it clear that it thinks a full economic recovery is years away.

[luckytxn 2,265]

Obama the Socialist has to be trying to destroy the U.S. before he is voted out of office.

[lostinblue 1,989]

http://www.forbes.com/2009/11/24/michael-cembalest-obama-business-beltway-cabinet.html

Obama's Business Blind Spot by Michael Cembalest

In a real departure from history, the current cabinet has almost no private- sector experience.The current administration, compared with past Democratic and Republican ones, marks a departure from the traditional reliance on a balance of public- and private-sector experiences.

The prevailing sentiment is best expressed by one of Secretary Geithner's own deputies: "Why would we consult the very executives who got us into this mess?" and Congressman Barney Frank: "The private sector got us into this mess. The government has to get us out of it."

In a recent survey by the National Federation of Small Business, the primary concerns were poor sales, high taxes, government regulation and red tape (credit was only mentioned by 4% of respondents). For some companies, the prospect of cap and trade（EPA end run), a health care bill that does not restrain costs, unionization bills and higher corporate/personal tax rates may be too much for a hiring tax credit to overcome. As shown below, there's already a lot of stimulus in train; debates about what comes next need to be measured against the cost of paying for it.

Public-sector employment has another drawback as well at a time of rising entitlements: State and local employees represent12% of the U.S. workforce, and a whopping 64% of all unfunded pension liabilities.

...MORE.....

[mawilson 2,133]

Obama the Socialist has to be trying to destroy the U.S. before he is voted out of office.

You mean Bernanke the Socialist?

[Captain Oates 911]

You mean Bernanke the Socialist?

I thought Bernanke was a a Kenyan and was carrying out the posthumous commands of Jomo Kenyata ?

I want to know which president appointed him ? (actually I know)

The truth is that he is apolitical and interested only in the economy. Americans owe him a debt of gratitude (no pun intended)

[mawilson 2,133]

The truth is that he is apolitical and interested only in the economy. Americans owe him a debt of gratitude (no pun intended)

Indeed.