By James A. Lyons
By arming the rebels, we're aiding al Qaeda
U.S. stocks moved higher Tuesday, helped by news of a pickup in homebuilding and low inflation. But the Federal Reserve loomed large, with investors trying to guess what the central bank will say Wednesday about how long it plans to keep stimulus programs in place. For many, Tuesday was just a holding pattern as they waited for Wednesday's announcement.
Investors are in a game of wait-and-see with the Federal Reserve. On Monday they guessed that the Fed will continue to try to prop up the economy — and sent stocks higher.
A pair of better economic reports helped nudge the U.S. stock market up Thursday afternoon, even as the Japanese market plunged again.
A private survey shows U.S. businesses added just 135,000 jobs in May, the second straight month of weak gains.
Over the long, hard course of President Obama's painfully slow, job-scarce, subpar economy, he may have set a record for persistent media reports that his shaky recovery was finally showing signs of strength.
For many investors, the more than halving of the deficit from a high of $1.55 trillion during the depths of the recession is the latest sign that the economy finally has turned the corner and is on a solidly upward path.
The stock market turned higher Tuesday as investors banked on continued policy support from the Federal Reserve. Two big retailers also topped Wall Street's expectations for the most recent quarter.
Nearly three years after Congress passed the most far-reaching new regulations on Wall Street since the Great Depression, worries have resurfaced that the biggest U.S. banks have only grown in size and remain bailout candidates because they are "too big to fail."
The Dow Jones industrial average on Tuesday surged convincingly past its previous record and landed at an all-time high of 14,253.77, fueled by record corporate profits and the loose money policies of global central banks.
The U.S. economy just barely eked out a quarter of growth at the end of last year, according to revised estimates published by the Commerce Department on Thursday morning.
The stock market on Thursday plodded rather than soared, flicking between small ups and downs after two days of triple-digit gains.
Strong earnings from Home Depot helped lift the Dow Jones industrial average Tuesday. A jump in home sales and consumer confidence also brought buyers back to the market after a big sell-off Monday.
Federal Reserve Chairman Ben S. Bernanke Tuesday morning warned Congress that $85 billion of across-the-board spending cuts due to start on Friday will dampen economic growth this year.
Lending to homebuyers in the U.S. remains little above the depressed levels hit during the recession because banks are wary about lending amid a slew of regulations coming out next year and proliferation of enforcement actions by state and federal regulators, a top mortgage banking official told The Washington Times.
"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," he told the Senate Judiciary Committee. "That is a function of the fact that some of the institutions have become too large ... [which] I think it has an inhibiting influence."
'Too big to fail' fears rise as banks bulk up; lessons from past forgotten? →
Despite the Fed's concern, the central bank could contribute to the mortgage market's woes in the next year or two when it starts to sell off the trillions of dollars of mortgage bonds and Treasury securities it has accumulated since 2008 as it sought to drive interest rates lower through unconventional bond-purchase programs, he said.
Mortgage industry insider warns about a stifling regulatory cliff →
