Dow Fails to Regain 11,000

Stocks close mixed as the FOMC minutes from the March 16 meeting shed no new light on when the Fed intends to raise interest rates. Gregg Greenberg has The Real Story.
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NEW YORK (

TheStreet

) -- Stocks finished near the flat line after the

Federal Open Market Committee

released minutes in the afternoon from its March 16 meeting, offering a mixed assessment of the economic recovery and little indication about when an interest rate increase would come.

With the

Dow Jones Industrial Average

hovering just below the 11,000 mark, investors also wondered whether stocks could push the index back to a level not seen since September 2008.

But it was not to be Tuesday, as the Dow fell 4 points, or 0.03%, to close at 10,970. But the

S&P 500

improved by nearly 2 points, or 0.2%, at 1189, as the

Nasdaq

went higher by 7 points, or 0.3%, at 2437.

The market had awaited hints in the FOMC minutes of when the group plans to hike its key rate from its near-zero level. But the group offered few giveaways, continuing to suggest economic concerns will probably keep a rate hike at bay in the immediate term.

During the meeting,

FOMC members discussed their continued decision to keep the fed funds rate at "exceptionally low levels ... for an extended period." Though participants said the "extended period" language was based on economic conditions rather than any specific passage of time, and could mean monetary tightening sooner, members also suggested the period could last longer if economic conditions worsened.

"What I read there is it can go either way," said Brian Bethune, chief U.S. financial economist at IHS Global Insight. "Maybe they're trying to get rid of the

presumptive six-month timeline that people have sort of thrown out there."

Kansas City Fed President Thomas Hoenig, the lone dissenter from the FOMC statement, suggested the extended period passage should change to "a low level of the federal funds rate for some time."

About Hoenig's proposed subtle shift, Bethune laughed, "it's worse than being able to interpret the ancient Hebrew text of the old testament."

Stocks edged to their highs of the session in an otherwise tight range of trading after the release, but drifted back to mixed territory at the closing bell.

Jeff Kleintop chief market strategist at LPL Financial, likened the significance of passing the 11,000 mark on the Dow to seeing job growth in Friday's March nonfarm payrolls report.

"It's a sign of really advanced recovery in the market. Just as seeing job gains for the first time on Friday was psychologically important because we know signs of recovery don't count unless we're creating more jobs, Dow 11,000 is important because the last time the market was trading at that level was before the collapse of Lehman Brothers. So it's kind of like a statement that we've healed and have gotten back to where we were before the crisis," he said.

Overseas, Japan's Nikkei slipped 0.5%. Hong Kong's Hang Seng was closed for a holiday. The FTSE in London added 0.6%, and the DAX in Frankfurt rose 0.3%.

Great Britain's national election will take place on May 6, according to British Prime Minister Gordon Brown. Polls show Brown and his Labour Party are falling behind the Conservative Party's David Cameron. A Conservative victory would return the party to power for the first time in 13 years.

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The Economy

The only economic data on tap for Tuesday were the minutes from the March FOMC meeting. Despite some broadly positive signs, some sobering items could be found throughout. A number of policymakers made clear that a sustained recovery could not take hold without an uptick in the labor market. But the group agreed that economic activity was strengthening and the labor market was stabilizing, the minutes said.

Bethune said he was most struck by a set of downward projections in the report. Sluggish housing activity, among other items, pushed the group's GDP predictions lower. FOMC members also revised inflation projections down in 2010 and 2011. Though consumer spending picked up during the first quarter, several members said job losses, tight credit and sluggish income growth would act as headwinds moving forward.

"They've pulled back their expectations for growth and inflation, given that, despite somewhat more positive news, we're still in a situation where we're trying to get ourselves out of a deep hole," Bethune said. "It's really hard to argue about any change in policy."

Meeting participants also voiced concerns about the housing market since the sector remained sluggish despite government aid. "Indeed, housing sales and starts had flattened out at depressed levels, suggesting that previous improvements in those indicators may have largely reflected transitory effects from the first-time homebuyer tax credit rather than a fundamental strengthening of housing activity," the minutes said.

FOMC members also foresee foreclosure rates remaining high and inventory to swell further, putting more pressure on prices.

Federal Reserve

Chairman Ben Bernanke is scheduled to give a speech in Dallas on Wednesday at 1:30 p.m. EST.

Elsewhere, the

euro was pressured by concerns that the International Monetary Fund could demand strict reforms from Greece in exchange for providing financial aid, which could trigger further unrest in the country.

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Company News

An explosion Monday afternoon at an underground coal mine owned by

Massey Energy

(MEE)

killed 25. Four miners are still missing. Massey's stock shed $6.24, or 11.4%, at $48.45, making it the S&P's biggest laggard.

Alcoa

(AA) - Get Report

, along with financial names

Bank of America

(BAC) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

American Express

(AXP) - Get Report

led advancers on the Dow, while

Travelers

(TRV) - Get Report

and

Coca-Cola

(KO) - Get Report

declined at a steeper clip than any other on the blue-chip average.

Metals USA

, a metal service-center company, announced plans for an initial public offering of roughly 10.5 million shares of its common stock.

Shares of

Bally Technologies

(BYI)

lost 4.3% after the slot machine maker lowered its 2010 outlook and said it would sell Rainbow Casinos to

Isle of Capri Casinos

(ISLE)

late Monday.

Shares of

Brigham Exploration

(BEXP)

advanced 2.1% following its late-Monday announcement that it would issue 13 million shares to raise the capital needed to expand its drilling operations.

Kraft Foods

(KFT)

is getting reprimanded by British lawmakers for reneging on its promise to keep

Cadbury's

Somerdale plant running when it was pursuing the company. Its shares slipped 13 cents, or 0.4%, lower at $30.08.

Peabody Energy

(BTU) - Get Report

sweetened its offer for Australia's

Macarthur Coal

by 1 Australian dollar a share, raising the total bid to A$3.56 billion ($3.27 billion). Peabody shares gained 43 cents, or 0.9%, to $46.45.

Comcast

(CMCSA) - Get Report

won a key net neutrality battle against the Federal Communications Commission today. The federal appeals court in Washington, D.C. ruled that the FCC doesn't have authority to enforce net neutrality rules,

The Associated Press

said, or those rules that keep broadband providers from restricting or favoring flows of web content on their networks.

Agricultural conglomerate

Monsanto

(MON)

dipped 0.9% today in advance of its

second-quarter earnings results due out Wednesday.

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Commodities and the Dollar

The May

crude oil contract rose 22 cents to settle at $86.84 a barrel.

Late Tuesday, the American Petroleum Institute said crude supplies rose 1.07 million barrels last week. That buildup landed under a Platts forecast calling for a rise of 1.5 million barrels. The government's Energy Information Administration is scheduled to release its own weekly inventory figures Wednesday at 10:30 a.m. EST.

The June

gold contract, meanwhile, rose by $2.20 to settle at $1,136 an ounce.

The

dollar was trading higher against a basket of currencies, with the dollar index ahead by 0.3%.

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Treasuries

The Treasury's $40 billion auction of three-year notes had a high yield of 1.776% and a bid-to-cover ratio of 3.10. The sale attracted strong support from indirect bidders, which took 52.3%.

The government will also auction off $21 billion in 10-year notes on Wednesday.

The benchmark 10-year Treasury strengthened 8/32, diluting the yield to 3.958%.

The two-year note rose 3/32, lowering the yield to 1.136%. The 30-year bond weakened 1/32, strengthening the yield to 4.835%.

--Written by Melinda Peer and Sung Moss in New York

.

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