Investors Corner Fed; Expectations for Action Drive Rally, but Upside Is Unclear
For some investors, bad news is good news.</br></br>The U.S. economy added 96,000 jobs last month, the government said on Friday. That is fewer than Wall Street analysts were expecting and the latest sign of a sluggish recovery, some economists said.</br></br>Yet the prices of everything from stocks and gold to Treasury and mortgage debt rose. The rallies reflect near certainty among investors that the Fed will announce additional monetary easing as soon as Thursday, when a scheduled two-day policy meeting ends.</br></br>The reaction shows how markets have come to depend on central bank stimulus since the financial crisis, and underscores the high stakes for the Fed and its chairman, Ben Bernanke.</br></br>Some analysts and investors say the Fed must announce a big stimulus plan quickly or risk disappointing the market, potentially setting the stage for a broad selloff. The European Central Bank last week spurred a sharp stock-market rally by announcing a bond-buying program that will make it easier for troubled countries to issue new bonds.