Investors' Hopes for Today's Fed Announcements
Global financial markets are hoping that the Fed will announce that it will not be withdrawing its financial support of bonds anytime soon. If, however, the Fed announces plans to taper the bond buying program now or in the months to come, investors might flee the stock and bond markets, sending stock and bond prices down and interest rates up.
Stocks have rallied the past two days on hopes that the Fed will signal that it won’t reduce its stimulus until it’s sure the economy can handle it. As the Washington Post says, "investors have a long history of buying on the rumor and selling on the news."