The dollar fell for a second day after the Fed announced its plan to purchase $300 billion in longer-dated Treasuries and up to $750 billion in agency debt and mortgage bonds. But stocks were declining as fresh numbers on unemployment showed the number of continuing claims rose to a new record high.
You can make lending more available, but where are the qualified borrowers, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. With jobs becoming ever more difficult to find, default rates on all types of loans are bound to rise.
People are in more debt than ever, so enticing them further into debt makes no sense. Until the debt that consumers and businesses owe is paid down, spending can't increase.
If you've got a good job, solid credit and your home's value hasn't fallen dramatically, you're likely to benefit from the Federal Reserve's extraordinary action Wednesday to help drive mortgage rates to historic lows and revive the U.S. housing market.
Sources say Fed Chairman Ben Bernanke was personally on the phone with the last three people in the U.S. who find themselves in this happy situation, urging them to spend more and to get themselves into debt. No word was given on whether he used the Fed's computer to increase the balances of the accounts they have at their local banks, as he has done for the large commercial banks that hold accounts at the Fed.
We need to do that now because the economy is very weak, and inflation is very low, Bernanke said during his 60 Minutes interview last Sunday.
In recent trade, the DOW was moving lower by 0.78%. The broader S&P was lower by 0.64% and the NASDAQ by 0.38%.
The dollar was falling across the board for a second day, with a decline of 1.63% to the euro, 2.20% against the yen, 1.86% against Australia's currency and 2.03% to sterling.
March crude was higher by 7.13% as traders bought into Bernanke's plan to debase the currency.
Gold for April delivery was higher by 7.61% as the dollar declined.