A late-day slump left stocks mixed Wednesday as investors couldn’t hold on to their optimism after the Federal Reserve gave an encouraging assessment of the economy.
NEW YORK (AP) — A late-day slump left stocks mixed Wednesday as investors couldn’t hold on to their optimism after the Federal Reserve gave an encouraging assessment of the economy. A House vote to speed up the effective date of limits on credit card companies took bank stocks sharply lower in the last hour of trading.
The Fed, as expected, left its benchmark interest rate unchanged at a record low of essentially zero and said the economy is slowly rebounding. Its announcement followed reports on service industries and employment that eased two of the biggest worries about the economy.
The Fed’s statement accompanying its rate decision noted that housing activity has picked up in recent months. It also said consumer spending, while still constrained by unemployment and other problems, appears to be growing.
Policymakers said they would keep interest rates low for an “extended period” and said inflation is likely to remain tame. That eased some worries that rising prices would force the Fed to boost interest rates and risk cutting off a nascent recovery in the economy.
But, as often happens after Fed meetings, stocks were unable to hold their gains. The Fed statement, while more upbeat than in recent months, did note that there are ongoing job losses. And investors were well aware that the Labor Department’s October jobs report is just two days away, scheduled for release Friday morning.
Meanwhile, the House approved new rules for credit card companies unless lenders agree to freeze interest rates and fees. The vote would move up the February effective date of legislation already passed by Congress that limits what banks can charge for credit cards.
It didn’t appear likely that the Senate would also pass the measure, but the House vote still sent financial stocks falling. And when bank stocks fall, the rest of the market tends to follow.
According to preliminary calculations, the Dow rose 30.23, or 0.3 percent, to 9,802.14. It had been up as much as 156 after the Fed announcement.
The broader Standard & Poor’s 500 index rose 1.98, or 0.1 percent, to 1,046.50, and the Nasdaq composite index fell 1.80, or 0.1 percent, to 2,055.52.
Winning stocks were ahead of losers by 8 to 7 on the New York Stock Exchange, where volume came to 1.35 billion shares.