Market Rallies Back, Fed Hawk Hints at QE

The market started the day off down significantly. The Dow Jones was down nearly 180 points earlier in the session. Then, in the second half, markets began to rally sharply into the close and went into positive territory. Stocks may have been fueled to the upside on comments coming from Federal Reserve governor Narayana Kocherlakota. Kocherlakota is widely considered to be an inflation hawk, having dissented from the Fed's decision to undertake Operation Twist last year. In a question and answer session following his speech earlier today, Kocherlakota stated that going over the fiscal cliff would argue for additional quantitative easing. The fiscal cliff has become a popular term for the consequences of congress not acting to adjust the tax code before the end of the year. Should that happen, Americans would see a variety of taxes increase. Alternatively, markets may have been moved higher by speculation on European events.