Stocks bounce as Fed launches QE3

The central bank announces more stimulus measures. Weekly jobless claims rise sharply. Wholesale inflation increases the most in 3 years. Apple remains in focus after its iPhone 5 announcement.

By Melly Alazraki Sep 13, 2012 9:23AM
stock marketUpdated 12:35 p.m. ET

Stocks rallied immediately after the Federal Reserve Open Market Committee announced it would keep rates low until mid-2015 and launch a third round of quantitative easing. The Fed is launching a bond-buying program to purchase mortgage-backed securities by $40 billion a month.

The Dow Jones Industrial Average ($INDU) was up 61 points at 13,394. The S&P 500 ($INX) was up 6 points at 1,443. The Nasdaq Composite ($COMPX) was up 13 points at 3,127.

The Fed wraps up its meeting Thursday and will announce its policy decision at 12:30 p.m. ET. A news conference with Fed Chairman Ben Bernanke is scheduled for 2:15 p.m. ET.

Bernanke is widely expected to announce further monetary stimulus measures. Economists and investors expect the Fed to embark on a third round of quantitative easing through large-scale asset purchases. In addition, investors will listen closely to Bernanke's language to get a better idea of what policymakers are thinking.

Jobless claims rise sharply
The number of people who applied for U.S. unemployment benefits jumped by 15,000 in the week ended Sept. 8 to stand at 382,000. That's the highest level since mid-July and higher than the 369,000 economists had expected, according to Briefing.com. The reason for the sharp jump is mainly the 9,000 delayed claims filed by people affected by Tropical Storm Isaac.

Still, claims have barely changed in the past month, indicating a sluggish U.S. labor market and little job creation. Although layoffs have fallen to exceedingly low levels, companies are not hiring much. The Labor Department also revised up claims from two weeks ago to 367,000 from an initial reading of 365,000.

Wholesale inflation rises most in 3 years
Meanwhile, U.S. wholesale prices jumped a seasonally adjusted 1.7% in August, mainly because of higher fuel prices, the Labor Department said. Economists had expected an increase of 1.2%, according to Briefing.com. In July, PPI rose by 0.3%.

Excluding food and energy prices, which tend to be more volatile, core wholesale prices rose only 0.2%, in line with economists' expectations, according to Briefing.com. The energy index surged 6.4%, and the wholesale cost of food rose a sharp 0.9%.

While wholesale prices rose last month, companies may find it hard to pass the increases on to consumers because of the tepid global economy, meaning consumer prices may not have been affected as much. Higher inflation could impact the Fed's stimulus policies. So far, consumer inflation has been below the Fed's target rate of 2%. August CPI is due out Friday.
U.S. and global stocks closed generally higher Wednesday after a key ruling by the German court that could have affected the European Central Bank's ability to assist struggling eurozone countries. On Thursday, however, Asian and European stocks were mostly lower as investors took a cautious approach ahead of the Fed's announcement.

Stocks to watch
Apple (AAPL) remains in focus a day after it introduced the iPhone 5. Several analysts raised their forecasts for iPhone sales. They also raised their forecasts for Apple's share price by as much as $60, to between $750 and $820.

Home furnishings retailer Pier 1 Imports (PIR) posted a 58% jump in fiscal-second-quarter earnings and raised its full-year earnings guidance.

Britain's BAE Systems and Airbus-owner EADS said they are in advanced talks to create an industry giant that would overtake rival Boeing (BA) in sales and contend with defense cutbacks in Europe and the U.S. But investors, Bloomberg reports, are far from impressed, concerned that the proposed merger would struggle to deliver cost savings and penetrate the key U.S. defense market.

Citigroup analysts downgraded semiconductor makers Intel (INTC), AMD (AMD) and Marvell (MRVL), saying they see little catalysts for PC related stocks.
Tags: AAPLBAPIR
212Comments
Sep 13, 2012 10:10AM
avatar

What do you know food inflation rose quite a bit, the most in 3 years, and people on this discussion page still argue with me that there is no inflation.  ahem Mirage Guy ahem.

Sep 13, 2012 9:44AM
avatar

LA Times this morning reporting that the state's 16% of the population now in poverty is an all time high and still is rising. 

 

basically 1 out of every 6 people.  since they are not scattered about evenly around the state, that really means giant swaths of people in several high density areas are 100% poverty. 

Sep 13, 2012 10:08AM
avatar
Not only is Obama hurting us with his morally and financially bankrupt domestic policies, he's putting us all in danger with his cluster-monkey foreign policy strategy of "appease and apologize".  What's happening now in the Middle East is a direct result of the policies of this administration for the last 40+ months.  We encouraged the Arab Spring, naively underestimating the resulting power vacuum.  We insisted that the Muslim Brotherhood be legitimized by inviting them to the White House and meeting with them on several occasions.  We insisted that the MB be given a prominent position of authority in the formation of new governments in Egypt and Libya, we give them billions of dollars, we refuse to acknowledge that Muslim extremists want to kill us, we ban the use of the phrase "war on terror", and then we are surprised when all hell breaks loose?  It's bad enough that we have less people working, more people dependent on entitlement programs and that we've racked up another $5+ trillion in debt, but now we're less safe than we were before this incompetent, inexperienced, unqualified, naive junior senator from the corrupt state of Illinois took over.  And after all this, almost half of us are going to vote to give him another 4 years in office.  Sad.
Sep 13, 2012 10:35AM
avatar
Remember when stock markets used to stand on their own merit, and we admired the entrepanuers, risk-takers, and gamblers who invested their hard earned real money risking total loss. Now that's all over. The entire market system is on welfare, and brokers and shareholders alike wait for the next handout like hungry food stamp recipients.  
Sep 13, 2012 12:36PM
avatar
The Feds are out of bullets...............and the market makers are trying to manipulate it now!
Sep 13, 2012 12:19PM
avatar
The epitome of nanny state gov't.

New York limits the size of soda you can buy. You can buy a gallon of 100 proof liquor but my gosh don't buy that 48 oz Coke.

This is where our money goes. To idiots.
Sep 13, 2012 12:11PM
avatar

ROFLMAO! 

 

The economy is doing so well that the counties are asking hotels to donate their "gently used" towels, sheets and pillowcases to the prisons.

 

Oh yeah, we can all see how good the economy is doing!

Sep 13, 2012 12:47PM
avatar

"The central bank announces more stimulus measures. Weekly jobless claims rise sharply. Wholesale inflation increases the most in 3 years."

 

You left out the best part. Wall Street banker bonuses now guaranteed to exceed all time high's for 2012.

Sep 13, 2012 12:44PM
avatar
Wall Street is happy; the rest of us, not so much.
Sep 13, 2012 12:47PM
avatar
Guess I better write to M.r O Bama and tell him I won't be voting for him and he needs desperately to get rid Of BERNII
Sep 13, 2012 12:48PM
avatar
Well, folks. Mark you calendars. This is the day America died.

You just wait. Wall Street will be back demanding QE4 in a month. Do you think the rating agencies are going to take kindly to a country that purposedly debases their own currency? Do you really think all those countries currently holding American debt are going to be happy with us deflating the value of that debt? Do you really think all those oil buying countries are going to put up with having to buy oil with a fiat currency that is worthless?

Speaking of worthless. The phony pension plans of all Americans just went down in value (again) today. The value of the money being used to pay back mortgages, student loans, all lines of credit, just lost value. The value of the money in American savings acounts just took (another) hit. The value of every dimininshed American paycheck just went down again.

America, why do you stand for this? The people are  sovereign, not the criminal shyster banks, not the FED, not corporations, not the politicians. This land is your land. Why have you not risen up and taken it back? The only reason we are in this mess is because you America have sat silent and done nothing.

The cure is so easy. Prosecute and jail the criminal shyster bankers. Re-institute the rule of law. Take away the pensions of the politicians. If you cannot have a real pension then neither should they. Take away their health insurance; if you cannot have health insurance then neither should they. Freeze their salaries, like they have frozen yours. Breakup the banks.  Kill the FED. Kill all central banks. Corporations are not people, they are monsters and should be dealt with accordingly. If these criminal corporations insist on shipping American jobs overseas then make them leave, and bring the jobs home.  Kill Wall Street. Reduce the budget of the Military Industrial Complex by three-quarters. Bring our troops home. Keep our nuclear arsenal and tell the world to backoff. Use these funds to pay down the debt, re-educate our children for a future where they matter, where everybody matters. Use the money to update of power systems, and build mass-transit , rebuild our infra-structure.

This  is just for starters. 
Sep 13, 2012 12:32PM
avatar
the market is like a spoiled child.... holding it's breath until it gets what it wants.
Sep 13, 2012 12:39PM
avatar
STOCK JUMP UP AGAIN ONLY BECAUSE OF ANOTHER FED STIMULATION AND A STUPID I PHONE!
Sep 13, 2012 12:25PM
avatar
Next week's spike in unemployment will be blamed on the short holiday week ending Sept. 8.  Tthere was one day less opportunity for people to go to the unemployment office due to Labor Day. Obama is toast because he is out of excuses!
Sep 13, 2012 12:43PM
avatar
Ben you friggin suck. Wall Street just blew their LOAD..Great job Ben say hello to the end people.....
Sep 13, 2012 10:09AM
avatar
Yesterday was the 11th anniversary of the September 11 attacks, and on that day President Obama  blew off Israeli prime minister Benjamin Netanyahu, but did agree to appearing on David Letterman's show.

Priorities.

Now we're learning that yesterday, you know, on 9/11, MTV confirmed that although Obama can't find time to meet with Netanyahu, he has found time to attend a fundraiser with Jay-Z and Beyonce:

 confirmed Tuesday (September 11) that Hov and wife Beyoncé will host a fundraiser for President Obama at the rapper's 40/40 Club in Manhattan next Tuesday. The president will be in attendance at the 100-guest event, with ticket prices hitting $40,000 per guest. Reportedly, it will be Obama's last fundraising event in New York City before the November 6 election.

Maybe if Netanyahu changed his name to ," Obama might find some time for him.

Sep 13, 2012 10:33AM
avatar

It doesn't matter what the FED does.............all stocks are overpriced by at least 50% right now.  The Feds and worldwide central bankers have been pumping and dumping this market since November of last year.  And, every time it drops by the least little bit, they get in there and start pumping it...........doesn't matter to them what the economy is really doing.  One would think that if these central bankers were really smart, they might learn how to catch it on the way down like GS did during the 2008 crash.

 

The real unemployment rate is at 22% (official reported rate at 8.1%) and we just lost 12,000 more and HP has said they plan to layoff 29,000.  The only jobs they are pushing right now are seasonal, low paying retail positions........whoa, some headline there huh!

 

There is this convoluted thought process in this world (created by wall street, the feds and central bankers, and corporations) that stock prices need to only go in one direction (up) to make money in the markets.............that is totally false.  As proven by everyone of these entitites themselves during the many crashes throughout history.  There is also another convoluted thought process on mainstreet that the stock market should only move in one direction (up).  That is another total falsehood.............the markets are supposed to go up, down and sideways, down, up and sideways.

 

Now, with that said, what the FEDS, World Wide Central Banks, Wall Street, and all of the news media, and newsletter writers are doing is called "pump and dump"...........it's illegal, every bit of it!

 

 

 

Sep 13, 2012 12:44PM
avatar
Looks like we taxpayers have been screwed into giving the investors more money or should I say Bernanke giving our taxpayer money to the investors. NO votes for OBAMA!! Last straw.Take the money out of Bernankes pay and payoffs hes getting!
Sep 13, 2012 10:05AM
avatar
Obama...worst president in the history of this great nation!!!!
Sep 13, 2012 9:51AM
avatar
Obama's polocies have not worked...........he is and has been all along "over his head". He was NEVER qualified for the presidency!! No more Obama in 2012!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
273
273 rated 2
482
482 rated 3
661
661 rated 4
635
635 rated 5
639
639 rated 6
619
619 rated 7
489
489 rated 8
277
277 rated 9
166
166 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
LUVSOUTHWEST AIRLINES CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.