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Dow Up 20 Percent Since QE2 Began

The Federal Reserve headquarters in Washington, DC.
The Federal Reserve headquarters in Washington, DC.

The market began its current rally ten months ago when Fed Chairman Ben Bernanke first hinted at a second quantitative easing (QE2) program during his speech at Jackson Hole, Wyoming on August 27:

“Notwithstanding the fact that the policy rate is near its zero lower bound, the Federal Reserve retains a number of tools and strategies for providing additional stimulus….A first option for providing additional monetary accommodation, if necessary, is to expand the Federal Reserve's holdings of longer-term securities.”

Thursday marks the end of a $600 billion bond-buying program by the Federal Reserve.

Even as the country’s unemployment levels remained high, the QE2 rally erased the market’s post-Lehman bankruptcy losses, pushing stocks all the way up to multi-year highs back in April of this year.

Sitting at those highs two months ago, the Dow had risen 28 percent from its levels prior to Chairman Bernanke’s speech, while the S&P 500 had jumped 30 percent and the Nasdaq Composite had soared 36 percent from their levels seen before the start of QE2.


Even as economic growth has shown signs of sputtering over the past couple of months, causing stocks to retreat off their April highs, the Dow and S&P are still up more than 20 percent since the end of last August.

Winners and Losers Since QE2

The market’s ten-month rally has been both steep and broad. In fact, every S&P 500 sector has posted a double-digit gain in the period. Moreover, just 3 of the Dow Industrials’ 30 stocks, 28 of the S&P 500’s components (less than 6 percent of the index), and a mere 8 of the Nasdaq 100 companies are down during the QE2 rally.


Data source: CNBC Analytics and Thomson Reuters
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