The Dow: The Only Thing That Matters Now

All eyes on the Fed! The market remains in a holding pattern as investors wait for an announcement from the central bank, which concludes its two-day regular policy meeting today. An announcement is expected at around 12:30 p.m. EDT today. Result: The S&P 500 (INDEX: ^GSPC) and the Dow (INDEX: ^DJI) have been inert this morning.

Expectations are high, but my (slightly off-consensus) view is that Bernanke has been signaling that his bar for a change in policy (more QE -- quantitative easing, an extension of the zero-rate period into 2015, or something new entirely) is higher than the market imagines. Furthermore, the Fed is no longer battling disinflation at this stage. As far as spurring genuine economic activity rather than asset price inflation, retired super-speculator George Soros reminds us that the Fed's bond-buying programs obey the law of diminishing returns.

Will Bernanke dare to disappoint? Two-thirds of economists polled by Bloomberg believe a third round of QE is in the works, but PIMCO honcho Bill Gross puts the odds at just 25%. I'm with Bill on this one, but handicapping this stuff is a bit of a mug's game. If you're looking for investment analysis that accounts for both outcomes of another big impending event, be sure to check out the special report "These Stocks Could Skyrocket After the 2012 Presidential Election."

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