The markets slide will surge - Boston Globe

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Stock markets plunged, and gathered yesterday, after the Federal Reserve said it would hold interest rates at historically low levels for at least two years and may have additional measures if economic conditions worsen.


It was another wild day of trading in the battered market. Shortly after the Fed has issued the policy statement, fell the Dow Jones industrial average about 200 points before it recovered to add 429.92 points and close to 11,239.77 on the best one-day gain since March 2009.


Stuart Hoffman, Chief Economist at the PNC Financial Services Group in Pittsburgh, said that the spins display to reduce, as nervous investors after a week the feeling that saw angry Sales Manager, a European economic concerns, and a US credit downgrade.


"The fed, this is a strong sign that they are concerned about the economy and that it what it do be to prevent that a weak economy to a recessive"Hoffman, said."It is nothing he can do for you as your doctor tell you you are sick and he has medicine rather than there. This is the strongest medicine, but it is helpful. "


The rally made available to some relief after weeks of sliding stocks and large losses by two days. Last Thursday, the Dow over 500 points fell, followed by a point drop on Monday, which called memories of the financial crisis in 2008 achieved the nation into one of the longest recession in the aftermath of the second world war drove history.


In addition to concerns about a weaker U.S. economy financial markets are for sale all over the world with panic because of worry about the European debt crisis affected. Earlier this week the European Central Bank appeared ready to buy Spanish and Italian Government bonds as a way to help those Nations avert default.


If these Nations in arrears, it could paralyse European banks, which hold the debt, and spread throughout the international financial system to violate us and other banks to do business with European institutions.


The debt crisis has more and more pressure on stronger European economies, such as Germany. The most important German share index has lost 19 percent since the end of July.


In the United States, the economic growth at a snail's pace has slowed. The economy grew at a rate of less than 1 percent in the first half of this year, far lower than expected. The pace of setting remains anemic, while the US Government plans to the slash its massive debt, put an end to areas, which is a drag on the economy issues.


Many households feel simply poorer and have some of the benefits of the economic recovery that began more than two years ago. Values at home remain depressed, while retirement accounts and other investments have fallen. Consumer spending, which more than two-thirds of U.S. economic activity which, has hardly increased.


The Fed yesterday downgraded its Outlook for the economy, predicting "slightly slower recovery in coming quarters"as in June, in view of the increasing risks to growth." In an unusual move the Fed said it would keep its benchmark short-term interest rates close to zero until at least mid-2013.


In the past the Fed has been rarely, if ever an explicit time frame for their policies. Analysts said that move - sends a signal to markets that the Bank carefully monitored developments and is ready to act. The Fed has not ruled out that additional measures, such as such as recovery momentum in the economy to pumps further buying of government bonds,.


Gregory DACO, principal economist at IHS global insight, said stocks of one fell after the Fed statement because "strong negative response"from investors who thought the Central Bank would do more to stimulate the economy." He said, it may have been an expectation that the Bank another round of Treasury purchases, a movement which aimed bond, long-term rates to borrow low and encouraging businesses and households and spend to keep.


But some analysts question whether low growth in confidence is so low and companies is concerned, and consumers remain reluctant to lend.


"The Fed keeps no silver bullet;" Not the economy itself will save it "DACO said.


He noted that many solutions with the legislators and policy-makers in the Federal Government are. For example, an extension of the payroll tax cut and emergency benefits boost unemployment benefits, which this year could be many American households expenditure and the economy.


Congress out of session for the summer and is expected that after a day of work. But the drive to reduce the federal debt makes policy that would unlikely add to the deficit.


Christian Weller, Economist and Professor at the University of Massachusetts Boston public policy and senior fellow at the Center for American progress in Washington, said that he believes that the US economy has enough momentum to keep it to fall into a second recession.


Weller said that the US economy is missing the speed, the nation to reduce persistently high 9.1 per cent unemployment rate anytime soon. The Fed also predicts high unemployment in its statement yesterday it noted that its revised Outlook for the nation called unemployment rate "only gradually go back." "


This is a dark message to 14 million Americans currently in search of work.


"The Fed has a limited mandate," said Weller. "And a limited tool kit. "


via:Top News Google

The markets slide will surge - Boston Globe