Investors continued to wonder when the U.S. Federal Reserve will begin to wind down its asset purchase program, creating a rather choppy session Monday. The Dow Jones Industrial Average rallied 109.67 points to end at 15,179.85, logging its fifth-consecutive triple-digit move higher while the Nasdaq and S&P 500 index also closed in the green.
Stocks briefly took a leg lower, though, as investors reacted a "Financial Times" article, released around 2pm ET, which stated that Fed Chairman Ben Bernanke is likely to signal that the central bank is "close to tapering down" its $85 billion-a-month in asset purchases during the highly-anticipated press conference on Wednesday.
The Fed's one power is to create money out of thin air and it's currently using that power. In September, it launched a third round of quantitative easing, in which it will buy $40 billion of mortgage-backed securities per month to try to foster a burgeoning recovery in the real estate market. Its purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions — primarily in unemployment — improve. To pay for its bond-buying program, the Fed is just printing more money.
