Dow ends mixed as Fed leaves door open for stimulus

NEW YORK (AP) – Stocks got a brief bump following word that the Federal Reserve is ready to do more to help the US economy, but ended mostly lower Tuesday after the central bank disappointed some investors by not taking any bold new actions. The Dow rose 7.41, or 0.1 percent, to close at 10,761.03. It’s still up 7.5 percent for September, an unsually large gain for a month that is historically weak for stocks.      

Treasury prices rallied as investors saw the Fed’s announcement as a signal that more bond purchases were on the way.      

The Fed said it is concerned that inflation is below levels consistent with a healthy economy and indicated that it is ready to provide “additional accommodation” to support the recovery. That would mean more purchases of Treasurys or other kinds of debt, which would keep interest rates low and hopefully encourage borrowing.      

“They left themselves as much room as they possibly could,” said Bill Stone, chief investment strategist at PNC Wealth Management. “In the bond world, the coast is clear for buyers.”      

Treasurys rose sharply after the Fed’s announcement, sending interest rates lower. The yield on the 10-year Treasury note fell sharply to 2.58 percent from 2.70 percent the day before, while its price jumped $1.03 to $100.34. The yield is a common benchmark for setting interest rates on corporate debt and mortgages.

The impact of the Fed’s statement, which came after a one-day meeting of its interest rate committee, had only a temporary effect on stocks. Hopes had been building that Tuesday would bring news of a specific new bond-purchasing program, and disappointment ensued when one didn’t materialize.      

Stocks had been trading lower ahead of the Fed’s announcement and rallied briefly after the news came out. A late slump erased most of the day’s advance from broad market indicators, while the Dow Jones industrial average, which tracks 30 large companies, ended with a meager gain.      

The Standard & Poor’s 500 index slipped 2.93, or 0.3 percent, to 1,139.78, while the Nasdaq composite fell 6.48, also 0.3 percent, to 2,349.35.