Deja Vu: Fed Remains Cautious, Stocks Tumble

All major U.S. financial markets tumbled a bit today after minutes from the latest Federal Reserve meeting confirmed what most people already knew. In a nutshell, the Fed remains cautious about the economy despite clear signs of growth, and it remains committed to keeping short-term interest rates near zero through late 2014.
The one new wrinkle was that despite its doubts about the economy, the Fed does not appear to be interested in launching a bond-buying, quantitative easing program to help jumpstart the economy.
Bond experts such as Bill Gross have repeatedly insisted that a third round of quantitative easing – known as QE3 – is imminent. But today’s Fed minutes seem to suggest otherwise.
As a result, stocks pulled back just a tad. But that likely had as much to do with the fact that the financial markets were due for a pullback following yesterday’s big gains. On Monday, the Nasdaq closed at its highest level in more than a decade, the Dow Jones Industrial Average to its highest level since December 2007, and the S&P 500 to its highest level since May 2008.
Today those indexes all regressed slightly. The Dow fell 65 points, or 0.5%. The S&P 500 was down 0.4%. And the Nasdaq tumbled 0.2%.