NEW YORK ( TheStreet) -- Investors felt a bit of relief and lifted stocks off their session lows Tuesday after the Federal Open Market Committee offered a tempered response to the downgraded growth picture, saying it would keep securities holdings at their current level by reinvesting in longer-term Treasuries.
Stocks had lost ground for much of the day after weak reads on Chinese import demand and U.S. productivity did little to build confidence in the recovery.
The Dow Jones Industrial Average, which had been down well over 100 points earlier in the session, finished off by 56 points, or 0.5%, to 10,644. The S&P 500 shed 7 points, or 0.6%, to 1121, and the Nasdaq finished 29 points lower, or 1.2%, at 2278.
On Tuesday, the Fed's monetary-policy-setting arm said the economic recovery was slowing, highlighting a weak labor market, tight credit and little income growth. The FOMC continued holding its target interest rate at near zero, while also saying it would "keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities" and rolling over Treasury holdings as they mature. "I thought this was a really good middle of the road solution. It effectively is not pandering to either extreme," said Marc Pado, U.S. market strategist at Cantor Fitzgerald, saying the statement didn't include a new, broader quantitative easing program, but still did more than stay pat. "I think they wanted to walk that line -- not increasing the balance sheet, but not reducing the balance sheet... so, I think it was well played. The goal here was to do some modest quantitative easing." Domestic stocks got off to a rough start, and the major indexes in Europe and Asia fell overnight, in response to news that
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV