Dow Closes Higher; Fed Keeps Rate Same

NEW YORK (TheStreet) -- The major market averages recaptured a portion of their prior day's losses Wednesday afternoon even as another ratings downgrade in the eurozone kept sovereign debt worries in the headlines, though the Federal Open Market Committee made no move on its key interest rate.

The Dow added 53 points, or 0.5%, to 11,045. The S&P 500 gained 8 points, or 0.7%, to 1191, though the Nasdaq went ahead by only a fraction of a point, or 0.01%, at 2472.

Hewlett-Packard(HPQ) made news after the closing bell, announcing it will acquire Palm(PALM) for $1.2 billion, according to a release. Palm shareholders will get $5.70 a share, or a 23% bump over Wednesday's closing price, while it's believed the deal will close during HP's third quarter. After a momentary halt in trading, shares of Palm were climbing 27% higher in the extended trading session.

S&P lowered Spain's credit rating by one notch to AA, from AA+ with a negative outlook Wednesday, a day after downgrades to Greece and Portugal triggered a global selloff as investors feared a worsening eurozone debt crisis.

Overseas, Hong Kong's Hang Seng lost 1.5%, and Japan's Nikkei fell 2.6%. The FTSE in London slipped 0.3%, and the DAX in Frankfurt lost 1.2%.

Stocks faltered after news of the downgrade surfaced but stocks resumed higher with the Dow climbing solidly into positive territory, which Lawrence Creatura, vice president and portfolio manager at Federated Clover Investment Advisors, credited to a reporting season characterized by good earnings and even better outlooks.

"Another thing that may be going on is capital may be departing Europe as anxiety over European contagion increases -- that could be another positive factor for markets," Creatura added.

But Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, was less enthused about the mild uptick in most stocks, noting the heavy 200-point Dow drop on Tuesday along with today's light trading volumes.

"Yes, we shook off the Spain news, but I don't think it was the world's most impressive bounce," he said. "The Fed didn't rock the boat, so to speak, which is another positive. But the bigger picture for me: I don't think it's that impressive considering the steep drop we saw yesterday."

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