Global Finance -- MoneyBeat / Market insight from WSJ.com: Fed Is Delaying Day of Reckoning
Reassuring statements from the Federal Reserve have calmed financial-market anxieties. Stocks have recovered their June losses. But the Fed may not have solved the problem; it may just have put it off.</br></br>If so, markets could turn volatile as autumn approaches and investors once again begin wringing their hands over the likely timing and consequences of a cutback in Fed stimulus.</br></br>Stock and bond prices fell in June because investors fear the day when the Fed starts cutting back on its $85 billion in monthly stimulus for financial markets. When Fed officials indicated that they could start trimming the stimulus in a matter of months, the selling began. The market slide ended after a succession of Fed officials made forceful statements that they won't do anything until the economy is strong enough.</br></br>Lately, Fed Chairman Ben Bernanke has said he doesn't know when the Fed will begin to move: It will depend on the data.</br></br>In effect, he has pushed the problem into the future. Investors, somewhat mollified, have decided to worry about it later. They have begun buying again, riding a market that seemingly refuses to decline and sending the Dow Jones Industrial Average and other major stock indexes to record highs.