NEW YORK (
) -- Stocks failed to hold gains made after the
left rates unchanged and signaled its readiness to enact accommodative policies if needed.
Dow Jones Industrial Average
finished 7 points, or 0.07% higher at 10,761 while both the
lost ground. The S&P 500 shed 3 points, or 0.3%, to 1140, and the Nasdaq lost 7 points, or 0.3%, to 2349.
The U.S. dollar tanked against a basket of currencies following the Fed's announcement, with the dollar index last down over 1%.
In its much-anticipated rate decision and outlook statement, the
Federal Open Market Committee said that the pace of recovery had slowed in the last few months and that it would maintain its target rates at zero to 0.25%. Additionally, the FOMC paved the way to "provide additional accommodation if needed."
Federal Reserve Chairman Ben Bernanke
"Everyone knew the target rates were going to stay around zero. The question was how big the balance sheet was going to grow," said James Dailey, portfolio manager of TEAM Asset Strategy Fund. "The Fed has now laid the groundwork to grow the balance sheet even more."
Dailey also said that the dollar's swift downward reaction was not unexpected in light of more quantitative easing. "From a risk-reward perspective, a long dollar vs. euro trade would actually make sense now. It is counterintuitive, but people are ignoring the fact that Europe has growth issues which could weaken the euro," he said.
Stocks ran in place just below the flat line for most of Tuesday's session but got a bump after the Fed's rate decision statement was released.
Earlier, the Department of Commerce said
housing starts rose 10.5% to 598,000 from 541,000 in July. That was higher than the 550,000 starts that economists had been expecting for August, according to Briefing.com. Building permits also hit a higher-than-expected level during the month, rising 1.8% to 569,000. The market had been anticipating 560,000 permits.
Shares across the
homebuilding sector traded broadly higher Tuesday with the
SPDR S&P Homebuilders ETF
up 0.5% at $15.64.
After the close of trading, the American Petroleum Institute said crude oil inventories rose by 2.23 million barrels in the week ended Sept. 17, which missed the 1.5 million-barrel drawdown that analysts polled by Platts had been expecting.
Capital goods, conglomerates and transportation sectors showed the most strength during Tuesday's session. On the Dow,
had the best performance while
were the biggest laggards.
rose to a new 52-week high on Tuesday, helped by news of a licensing deal with Planet Hollywood. The stock finished the session 1.5% higher at $28.27.
stock shed 1.8% to $30.96 despite news that it enhanced the software for its PlayStation 3 system in hopes of gaining ground against rivals
missed analysts' estimates by 3 cents with adjusted earnings of 34 cents a share and disappointed the market by lowering its expectations for full-year profit growth. The stock lost 3.6% to $21.57.
Shares of cruise operator
gained 1.4% to $37.57 after reporting an 18.2% increase in third-quarter profits, or $1.62 a share. Analysts, meanwhile, had expected earnings of $1.47 a share.
isn't likely to be hurt by initial public offerings from
, which could come as early as next year, according to a recent analyst report. The stock finished 0.2% lower at $12.55.
Bank of America
is preparing layoffs in certain "profit-challenged" areas such as its capital markets business, according to a
report. Bank of America's stock slipped 0.7% to $13.65.
snapped up rival market-data service provider
for $300 million, according to a
Wall Street Journal
International Air Transport Association raised its 2010 profit forecast for the airline industry to $8.9 billion, up from $2.5 billion in June, but said it sees lower gains next year. Shares of
Delta Air Lines
gained 4.9% to $24.66 and 3.5% to $11.95, respectively.
New York Times
plunged 5.6% to $7.97 and 2.4% to $13.17 after a UBS report warned of a weak advertising market within the newspaper sector.
In commodity markets, crude oil for November delivery settled lower by $1.22 to $74.97 a barrel, and the December gold contract settled lower by $6.50, at $1,274.30 an ounce.
The benchmark 10-year Treasury note rose 1 3/32, diluting the yield to 2.578%.
Overseas, Hong Kong's Hang Seng rose 0.1%, while Japan's Nikkei shed 0.3%. The FTSE in London added 0.3%, and the DAX in Frankfurt also gained 0.3%.
--Written by Melinda Peer and Shanthi Venkataraman in New York
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.