Stocks Rise as Federal Reserve Meeting Nears, A New Stimulus Program Awaits Us?

Stock markets surged Monday as investors awaited a Federal Reserve meeting, which will take place later this week, when a new stimulus plan may be announced. The gains were also enabled by gains in European markets.

The Dow Jones industrial average gained 148 points, or 1.4 percent, reaching 10967. Last week ended with two days of losses. The DJIA dropped 15 percent over the last four weeks because investors were anxious about the European debt crisis and another U.S. recession.

The Standard & Poor's 500-stock index increased 17 points, or 1.5%, to 1140, with technology and consumer discretionary stocks leading it. All 10 sectors traded on positive ground.

The Nasdaq Composite gained 41 points, or 1.8%, reaching 2383.

The Federal Reserve will hold its annual meeting in Jackson Hole, Wyo. Friday. Ben Bernanke, the central bank's chairman, introduced QE2 at this meeting last year. QE2 artificially injected money into the economy using bond buying.

The rapid slowdown of the global economy is rapidly increasing expectations that the Fed will introduce a new stimulus program at the meeting.

The best thing that could happen would be if Bernanke took a pass on initiating another round of quantitative easing, chief investment strategist at Robert W. Baird & Co. told the Wall Street Journal. It's highly doubtful that he would take that risk, especially with last week's inflation figures. It's also very rare that the market reacts to the same type of news twice in a row, he added.