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Bye, Bye QE3, Hello Volatility

ByNicholas Santiago
Published 06/20/2013, 05:15 AM
Updated 07/09/2023, 06:31 AM

This morning, the S&P 500 Index e-mini futures (ES-U3) are trading lower by 13.50 points to 1610.25 per contract. Yesterday, the Federal Reserve signaled that the end of quantitative easing will soon be underway in the next couple of months. This news caused the stock market to plunge lower by more than 200.0 points on the Dow Jones Industrial Average by the closing bell. Markets around the world are all falling sharply on the news. Chairman Bernanke also said that quantitative easing could be completely finished by mid-2014. This stock market has been addicted to easy money by the central bank for nearly five years. The economic recovery has been one of the weakest in history despite all of the easy money stimulus put into the system. After all, the U.S. economy does not grow at 3.0 percent a year yet.

Last night, all of the major Asian stock indexes plunged on the back of the QE-3 news. There was also more economic data released out of China indicating economic contraction. Traders should watch for weakness in most of the leading Chinese ADR's today. Some leading Chinese equities that could come under pressure include Baidu Inc (BIDU), Sohu.com Inc (SOHU), China Mobile Limited (CHL), and the Market Vectors China ETF (PEK).

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