US stocks mixed, with banks dragging down blue chips, even as Fed Chairman Bernanke all but promises the central bank will start buying up bonds very soon, but tech shares providing lift to the Nasdaq Comp.
DJIA falls 32 (0.3%) to 11063, led down by JPMorgan, BofA and GE (Boeing was in there, too.) S&P 500 adds 2 to 1176. Nasdaq Comp rises 33 (1.4%) to 2469, led by Google and its strong earnings report. Banks fall again amid growing foreclosure fiasco; GE falls as well after weak earnings report. The dollar actually rose today, after three straight down days. Treasurys fall, with the 10-year yield rising to 2.57%.
In a speech short on specifics, Bernanke makes case for Fed “action.” Without saying it specifically, the market tea leaves read it, and you can bet this is what he wanted them to read, that the Fed’s going to announce a new program of bond buying after its early November meeting. It’s going to some kind of incremental approach, some set dollar amount’s worth of bonds every month, rather than announcing one big lump sum. (Forget the question of whether or not it’ll actually, you know, work; we’re way past that debate.)
Of course, if you really want to dive down this rabbit hole, look at it this way. The market is expecting the Fed to say it’ll buy, say $100 billion worth of bonds every month until it’s satisfied it’s turned the economy around (that could add up, by the way.) But what it the Fed surprises people and says, hey, we’re gonna commit to $1 trillion right now. Whoo-wee, we’ll rally, boys and girls, you can bet your bottom dollar. That’s not even figuring in the midterms.