The FED decided today to extend Operation Twist (a policy in sell short term treasuries and buy long term notes) through the end of the year. The markets sharply sold off after hearing no outright QE3 (Quantitative Easing – commonly know as printing money) then rallied hard up to when Chairman Ben Bernanke began to speak and markets turned lower. Overall an erratic schizophrenic trading session.
The Dow Jones Industrial average (INDU) fell 67 points 0.5%, the S&P 500 (SPX) fell 8 points 0.6%, and the tech heavy Nasdaq (COMP) fell 10 points 0.3%.
Below is the daily chart of the DOW, and the FED related trading is easily spotted:
The FED also lowered their forecast for the 2012 economic growth rate to between 1.9% and 2.4% for the year, down from 2.4% to 2.9%. Highlighted as well was the weak labor market, and the FED said that if there was not improvement they would take additional monetary steps.
Out of Europe came word that Greece has indeed formed a coalition government completing another step along the way to solvency. Although there is still a long way for Greece to go yet.
The FED announcement did nothing to lift commodities today.
Oil dropped $2.97 to $81.06 a barrel which should add needed money back to the consumers pocket.
Gold fell $7.40 to close at $1,615.80 an ounce. Further downside risk is still prevalent and $1,640 needs to hold for bull market case to come back into play.
The 10-Year Note also fell pushing yields up to 1.66%.
Don’t forget to peruse D&D’s “Comprehensive Long-Term American Deficit Solution” ~ aka How To Fix The Fiscal Cliff.