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Stocks Finish Mixed as Fed Stands Pat

Stocks pull back after the Fed keeps its key interest rate near zero. Gregg Greenberg reviews the day in The Real Story video (above).
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NEW YORK (

TheStreet

) -- Stocks closed mixed Wednesday, retreating after the

Federal Open Market Committee

announced that it will keep its key interest rate

near zero

.

The

Dow Jones Industrial Average

lost 11 points, or 0.1%, to 10,441. The

S&P 500

finished ahead by 1 point, or 0.1%, at 1109, while the

Nasdaq

rose 6 points, or 0.3%, to 2207.

In its statement, the Fed reiterated that it will keep its fed funds rate at 0% to 0.25% and that conditions are likely to keep the rate "exceptionally low" for "an extended period." In a slight turn of phrase, the central bankers' statement also noted that deterioration in the labor market is "abating," though the typically cautious statement also cited a usual host of challenges to recovery.

>>Five Blue-Chip Stocks to Lead a Rally

The U.S. dollar turned higher after release of the Fed's rate decision, though was lower lately by 0.05%.

The Fed's assessment also highlighted an end point for emergency programs meant to steady the economy at its trough last year, reiterating that the programs' conclusion is approaching.

Quincy Krosby, market strategist for Prudential Financial, said that reiterating the programs' expiration was a pragmatic move that "basically gave the hawks a little bit more solace."

"It acknowledged that we are little by little pulling out," Krosby added about the statement as a whole, noting that it came within expectations. "Just not enough to warrant a formal change in the language as far as rates are concerned."

Inflation fears abated in the morning after a report showed November's

consumer price index rose 0.4%, meeting expectations. The news prompted some relief after

November's wholesale prices rose more than expected.

Jobs Will Drive Rate Hike

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Earlier in the day, PNC Chief Economist Stuart Hoffman said November's CPI data doused concerns for early unwinding by the Fed triggered by the unexpected spike in the producer price index.

"Lower oil prices in December will further squelch inflation fears when the December price data is released next month," Hoffman said.

"In the year ending in November, the core CPI is now up just 1.7%, which should give the FOMC the breathing room they need to maintain their near-zero Fed funds rate policy for an extended period."

November

housing starts met expectations at 574,000, up from 527,000 in October, which was downwardly revised from 529,000. Building permits rose 6% to 584,000 and came in ahead of forecasts for 570,000.

Shares of

KB Home

(KBH) - Get Report

,

Pulte Homes

(PHM) - Get Report

and

Lennar

(LEN) - Get Report

moved higher along with the rest of the housing sector, adding 6%, 5.1% and 4.7%, respectively.

Also on Wednesday, homebuilder

Hovnanian Enterprises

reported

(HOV) - Get Report

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expectedly downbeat fourth-quarter earnings after the closing bell. Though the company's loss narrowed to $3.21 a share on write-downs, the result widely missed analysts' slimmer loss estimates and sent shares over 12% lower in after hours trading.

The U.S. Federal Trade Commission filed suit against

Intel

(INTC) - Get Report

, accusing it of hampering competition and pushing competitors out of the marketplace. Its stock shed 2.1% Wednesday.

But the news reinvigorated the rest of the chip space, as the Philadelphia Stock Exchange Semiconductor Sector Index soared 1.7%, and shares of rival

Advanced Micro Devices

(AMD) - Get Report

gained 3.7%. Shares of graphics chipmaker

Nvidia

(NVDA) - Get Report

spiked 8.1% today.

Adobe

(ADBE) - Get Report

shares advanced over 4% today after the software maker beat fourth-quarter earnings forecasts and reported an improving demand outlook on Tuesday.

Microsoft

(MSFT) - Get Report

shares were also higher, lifted by news that European regulators settled a long-running antitrust case with the operating system manufacturer. Microsoft agreed to offer a wider slate of Web browser choices to Windows OS users, thereby allowing Microsoft to escape potentially costly regulatory fines. Shares added 0.3% today.

Citigroup's

(C) - Get Report

TARP payback was back in the news Wednesday on reports that the U.S. government agreed to forgo billions of dollars in

potential tax payments as part of repayment negotiations.

Earlier, mining-equipment maker

Joy Global

(JOYG)

topped analysts' estimates with a

fourth-quarter profit that rose 5%.

Shares of

Honeywell

(HON) - Get Report

slipped 2.1% after the company said charges related to pensions would pressure 2010 earnings.

The executive pay debate is back in the news as the

SEC

adjusts disclosure policies to more accurately reflect executive compensation.

Credit Suisse

(CS) - Get Report

said it's likely to pay $536 million to

settle a government probe investigating its possible dealings with countries under U.S. economic sanctions.

Prices across U.S. Treasuries were mixed after the Fed statement release. The 10-year's price slipped 3/32, boosting yields to 3.605%, while the two-year note's yield dropped to 0.843%.

Crude oil prices soared above $73 after the Energy Information Administration reported a 3.7 million-barrel decline in

crude inventories last week. But by the end of the session, the January crude contract settled $1.97 higher at $72.66 a barrel.

Gold prices also moved higher, with the February contract settling at $1,136.20 an ounce after adding $13.20.

Commodity-related stocks also rose, as the NYSE Arca Oil Index, Philadelphia Oil Service Sector Index and Philadelphia Gold and Silver Index rose 0.7%, 1.4% and 1.3%, respectively.

Overseas, Hong Kong's Hang Seng fell 0.9%, and Japan's Nikkei rose 0.9%. The FTSE in London advanced 0.7%, and the DAX in Frankfurt added 1.6%.

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

.