Can Someone Explain The Significance Of the Feds Exit From The Stimulus and the Amount of Points the

63,613
50,680
Joined May 23, 2005
There was no let-up in the flight from stocks and bonds as traders reacted to news that the Federal Reserve could end its massive bond-buying program as next year and as China's manufacturing slowed.
The Dow Jones industrial average plunged 353 points, or 2.3 percent, to 14,758 points Thursday.
The Dow has lost 560 points in the past two days, wiping out its gains from May and June.
The Standard & Poor's 500 dropped 40 points, or 2.5 percent, to 1,588. The Nasdaq fell 78 points, or 2.3 percent, to 3,364 points.
The price of gold dropped and bond yields rose sharply.
Stocks fell across the board. Twenty stocks fell for every one that rose on the New York Stock Exchange. Trading was very heavy at 4.8 billion shares.
From my news app
 
1,723
673
Joined Aug 8, 2005
There was no let-up in the flight from stocks and bonds as traders reacted to news that the Federal Reserve could end its massive bond-buying program as next year and as China's manufacturing slowed.
The Dow Jones industrial average plunged 353 points, or 2.3 percent, to 14,758 points Thursday.
The Dow has lost 560 points in the past two days, wiping out its gains from May and June.
The Standard & Poor's 500 dropped 40 points, or 2.5 percent, to 1,588. The Nasdaq fell 78 points, or 2.3 percent, to 3,364 points.
The price of gold dropped and bond yields rose sharply.
Stocks fell across the board. Twenty stocks fell for every one that rose on the New York Stock Exchange. Trading was very heavy at 4.8 billion shares.
From my news app
fed buys bonds = more money for banks to lend out to businesses and corporations (especially at low interest rates) to invest
fed stop buying bonds = higher interest loans --> loans cost more money for corporations/businesses --> hurts economy if those corporations decide to fire people or not open/purchase new capital
fed sells bonds they bought = lower bonds prices for bonds investors

basically, corporations and businesses might not want to invest into their businesses if loan rates were higher. this will hurt all of us.

slowed Chinese manufacturing means that the world economy is not in great shape (not buying from China). not a great sign for investors

someone with more expertise in this field can probably go into a lot more detail
 
Last edited:
3,949
1,194
Joined Nov 16, 2001
If the Fed stops pumping money into the economy, banks will have less to lend and mortgage backed security sellers won't have a HUGE client to buy from them. As a result, investors sell their shares in those companies and the cycle continues to other sectors of the market.
 
27
14
Joined Feb 27, 2013
Without getting into the minor details the big take away from this is that Bernanke is going to start slowing his QE program, which indicates he and a lot of other people think that the economy is getting better. Personally, I think the drop in the markets was purely speculative just like when Bernanke would speak about his prior QE programs. If anything, I'd be hunting for bargain prices right now in the markets. And as always, make sure to do your due diligence.
 
607
124
Joined Jul 18, 2012
buying bonds=bigger bucks
QE ending means that money isn't being pumped anymore
Stock market was due for a correction anyway
 
Top Bottom
  AdBlock Detected

Sure, ad-blocking software does a great job at blocking ads, but it also blocks some useful and important features of our website. For the best possible site experience please take a moment to disable your AdBlocker or head over to our upgrade page to donate for an ad-free experience Upgrade now