Updated from 4:07 p.m. EDT
Tech stocks gained ground while blue-chips ended flat in a volatile session Tuesday after the
Federal Open Market Committee
left rates unchanged and suggested that any future increases in interest rates would be done gradually.
closed up 11.76 points, or 0.61%, to 1950.48, while the
Dow Jones Industrial Average
added 3.20 points, or 0.03%, to 10,317.20, and the
was up 2.02 points, or 0.18%, to 1119.51. The 10-year Treasury note traded down 13/32 in price to yield 4.55%, while the dollar was lower against the yen and euro.
Volume was light before the Fed's announcement but finished near average levels, with nearly 1.7 billion shares trading on the
New York Stock Exchange
and over 1.8 billion on the Nasdaq. Advancers beat decliners by about 3 to 2 on both exchanges.
"The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal," the FOMC said in its statement. "Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with inflation low and resource use slack, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured."
The Fed also said it "continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity."
The Fed's decision was not surprising at all," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "We expected them to take 'patience' out of the statement. We expected them to say the economy is recovering nicely and inflation remains under control. Greenspan's approach is to take his time in doing things here."
"I think it's nonsense to be perfectly honest," he added. "I happen to agree with Warren Buffett and Bill Gross that inflation is an issue here. To me, this feels like the mid-1970s we're moving into here. I think they're moving too slow. They're taking their time. They're focusing on the employment issue when there are other things going on in the economy that could come back and bite them."
However, a labor report published Tuesday morning was possible evidence that questions still remain about the sustainability of the latest surge in the economy and the all-important job market. U.S. corporations announced 72,184 job cuts in April, up 6.1% from the 10-month low of 68,034 seen in March, according to the monthly tally released Tuesday by outplacement firm Challenger Gray & Christmas. Such data could contribute to inspiring the Fed to wait for more evidence of a strong recovery.
Mendelsohn said that Friday's jobs report is really going to be the driving force on the market in the near term. Economists expect nonfarm payrolls to add 175,000 new jobs, down from the 308,000 recorded in March. The unemployment rate is expected to stay put at 5.7%.
Crude oil for June delivery rose 77 cents, or 2%, to settle at $38.98 a barrel on the Nymex after hitting a new 13-year high earlier. An attack in Saudi Arabia that left five foreign workers dead raised concern that supplies from the world's biggest oil exporter may be disrupted, according to a report from
. The CBOE Gold Index jumped 4.9%.
Earlier Tuesday, the government said factory orders increased 4.3% in March, blowing away the consensus estimate of 2.4%, and February's upwardly revised 1.1% growth rate.
In corporate news,
said second-quarter earnings rose to $782 million, or 37 cents a share, from $124 million, or 6 cents a share, last year. Revenue rose 11% to $10 billion, while revenue growth, excluding acquisitions and currency effects, was 3.4%. The latest-quarter profit number was 5 cents a share better than estimates, and the company guided third-quarter earnings above forecasts, too.
Tyco shares closed up $1.03, or 3.7%, to $28.01.
. The dairy and prepared foods company, which reported a 10% jump in quarterly income to $69.2 million, noted serious cost pressures that it expects to linger into the current period.
Radio station operator
said first-quarter earnings rose to $116.5 million, or 19 cents a share, from last year's $71 million, or 12 cents a share. Revenue jumped 11% to $2 billion. Analysts had been forecasting earnings of 14 cents a share on revenue of $1.84 billion. Its shares closed down 23 cents, or 0.5%, to $41.80.
lost $310 million, or 17 cents a share, in the first quarter, compared with earnings of $152 million, or 9 cents a share, last year. Revenue fell 3.9% to $3.48 billion. Analysts had been looking for a loss of 14 cents a share on revenue of $3.5 billion. Its shares closed down 2 cents, or 0.5%, to $4.
Overseas markets were mixed, with London's FTSE closing up 1.3% to 4547 and Germany's Xetra DAX down 0.4% to 3991. In Asia, Hong Kong's Hang Seng fell 1.2% to 12,098, while Japan's markets were closed for a holiday.
Before Wednesday's opening bell, earnings announcements are due from more than 20 companies, including
At 10 a.m. EDT, the Institute for Supply Management is expected to report that its services index eased to 65.5 in April from 65.8 in March.