Here's Why the Dow Jones Had a Record Close Today

A blog about business and economics.
Nov. 6 2013 5:12 PM

Why the Dow Jones Had a Record Close Today

May the game of Whac-a-Mole monetary policy continue!

Photo by Emmanuel Dunand/AFP/Getty Images

Matthew Yglesias is on vacation.

The Dow Jones Industrial Average closed at a record today at 15,747. There’s really no good reason for the high, except that investors are expecting continued quantitative easing. It would not be terribly surprising for the Federal Reserve to continue the stimulus—contrary to some earlier expectations—partially because of the government shutdown.

The shutdown and its economic cost, which some believe could reach $24 billion, combined with broader economic uncertainty, are plenty sufficient reasons in the Fed’s eyes to keep the stimulus going. In June the reason was low inflation. May the game of Whac-a-Mole monetary policy continue!


Tuesday, two papers from the Fed board bolstered expectations of continued stimulus; as Bloomberg describes, they both "argued the need to maintain a loose monetary policy to support growth in the world’s biggest economy." That looseness currently manifests itself in $85 billion in monthly bond purchases.

CNN Money astutely points out that if these expectations are right, the Fed is probably stuck with them for a few more quarters: "Given this environment and the leadership transition as Ben Bernanke's term ends in January, the Fed will likely continue its current stimulus program at full blast … until at least March 2014."

While the predicted move seems to be pleasing investors—for the moment—it’s also a headache for those of us who think that putting off the Fed’s inevitable increase in interest rates is ultimately increasing our liability. As Paul Ashworth, the chief North American economist at Capital Economics, told CNN Money, "If [the Fed is] waiting for some degree of fiscal certainty, this really could turn into QEternity."

But don’t mind us. Looks like everyone is ready to hold their breath and cross their fingers for at least another quarter. Though it’s probably best to avoid Wall Street bars whenever the Fed decides to ease the quantitative easing, and finally pops this little microbubble. Although, come to think of it, why would anyone ever go to a Wall Street bar?



Meet the New Bosses

How the Republicans would run the Senate.

The Government Is Giving Millions of Dollars in Electric-Car Subsidies to the Wrong Drivers

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

Cheez-Its. Ritz. Triscuits.

Why all cracker names sound alike.

Friends Was the Last Purely Pleasurable Sitcom

The Eye

This Whimsical Driverless Car Imagines Transportation in 2059

Medical Examiner

Did America Get Fat by Drinking Diet Soda?  

A high-profile study points the finger at artificial sweeteners.

The Afghan Town With a Legitimately Good Tourism Pitch

A Futurama Writer on How the Vietnam War Shaped the Series

  News & Politics
Sept. 21 2014 11:34 PM People’s Climate March in Photos Hundreds of thousands of marchers took to the streets of NYC in the largest climate rally in history.
Business Insider
Sept. 20 2014 6:30 AM The Man Making Bill Gates Richer
Sept. 20 2014 7:27 AM How Do Plants Grow Aboard the International Space Station?
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Tv Club
Sept. 21 2014 1:15 PM The Slate Doctor Who Podcast: Episode 5  A spoiler-filled discussion of "Time Heist."
Brow Beat
Sept. 21 2014 2:00 PM Colin Farrell Will Star in True Detective’s Second Season
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Bad Astronomy
Sept. 21 2014 8:00 AM An Astronaut’s Guided Video Tour of Earth
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.