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Morning Market Roundup: High Hopes on Fed, Wholesale Stockpiles Up, Poverty Rate Unchanged


Here’s what’s important in the business world this morning:

Fed: If the world's investors are right, the Federal Reserve is about to take a bold new step to try to invigorate the U.S. economy.

And many expect the Fed to unleash its most potent weapon: a third round of bond purchases meant to ease long-term interest rates and spur borrowing and spending. It's called "quantitative easing," or QE.

Others foresee a more measured response when the Fed ends a two-day policy meeting Thursday. They think it will extend its timetable for any rise in record-low short-term rates beyond the current target of late 2014 at the earliest.

The Fed feels driven to act now because the U.S. economy is still growing too slowly to reduce high unemployment. The unemployment rate has topped 8 percent every month since the Great Recession officially ended more than three years ago.

U.S. Stocks: U.S. stocks are higher at the opening of trading after Germany's high court cleared the way for the country to participate in a European rescue fund.

The Dow Jones industrial average is up 38 points to 13,361 shortly after the opening bell.

In other trading, the broader Standard & Poor's 500 index is up five points to 1,438, and the Nasdaq index is up 13 points to 3,116.

U.S. Poverty: The Census Bureau reports the number of Americans in poverty stood at 15 percent in 2011. About 46.2 million people, or nearly 1 in 6, were in poverty. That is not statistically different from the 15.1 percent who were impoverished in 2010.

In all, the number of poor remained at record highs. The figures were better than the expectations of analysts who had predicted an increase due to persistently high unemployment.

The unemployment rate improved modestly in 2011, but wage growth was weak.

University of Michigan economist Sheldon Danziger calls the poverty figures surprising and a sign that expiring unemployment benefits were able to help workers for much of the year.

The median - or midpoint - household income was $50,054. That's a 1.5 percent decline from 2010

U.S. Wholesale Stockpiles: U.S. wholesalers increased their stockpiles in July from June, but sales fell for a third straight month. Declining sales could force companies to cut inventories in coming months, a troubling sign that economic growth could weaken.

The Commerce Department said Wednesday that wholesale stockpiles grew 0.7 percent in July, the biggest increase in five months.

Sales fell 0.1 percent following declines of 1.4 percent in June and 1.1 percent in May. That marked the longest stretch of weakness since seven straight monthly declines ending in January 2009, a period when the country was in recession.

The slump in sales means it will take wholesalers longer to clear out their stockpiles and could result in cutbacks in orders to factories. That would mean less production and weaker economic growth.

In July, total U.S. inventories stood at $485.2 billion, 26.1 percent higher than the post-recession low of $384.9 billion in September 2009. As businesses saw demand picking up, they became more hopeful and resumed restocking to meet rising demand.

The Associated Press contributed to this report.

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