US stocks have closed mostly lower after the Federal Reserve extended its bond-swapping program, known as Operation Twist, for six months to help boost the flagging economy.
The program, scheduled to expire at the end of June, was extended through the end of the year, the central bank’s policy-setting Federal Open Market Committee announced on Wednesday after a two-day meeting. However, some in the market had hoped for more.
“The Fed did the least that was expected, extending Operation Twist until the end of the year, but not altering the size of its balance sheet at all and not – as some analysts suggested it might – changing when it thinks it will start raising rates (still late 2014),” said FT Advisors in a research note.
The Dow Jones Industrial Average finished the session down 12.94 points, or 0.10 per cent, at 12,824.39.
The S&P 500-stock index fell 2.29 (0.17 per cent) to 1,355.69, while the tech-rich Nasdaq rose a meagre 0.69 (0.02 per cent) to 2,930.45.
“Four straight sessions of gains resulted in a cumulative gain greater than 3.0 per cent, but that streak was snapped today as participants responded to a flurry of headlines from the Fed,” Briefing.com said.
Stocks accelerated their losses on Wednesday after the policy-setting Federal Open Market Committee announced the extended stimulus, but quickly rebounded.
Charles Schwab & Co analysts said the Fed’s monetary policy decision, including leaving interest rates unchanged, and subsequent news conference resulted in an afternoon of choppy and cautious trading.
“Fed Chairman Ben Bernanke said the Committee is ‘prepared to do more’ if needed, amid a downgrade in its growth and unemployment rate forecasts, and as Fed officials took a slightly more dovish stance in their interest rate assessments,” they said.
Dow member Procter & Gamble slid 2.9 per cent after lowering its fiscal fourth-quarter forecast, citing softer sales growth and negative hits from foreign exchange rate changes.
JPMorgan Chase jumped 3.0 per cent on reports it has sold 65-70 per cent of its losing position that had brought a loss of at least $2 billion.
Starwood Hotels & Resorts Worldwide gained 1.0 per cent. Starwood, which has 103 hotels open in China, announced it has 100 more in the pipeline.
Software company Adobe Systems dropped 2.7 per cent after reporting a drop in second-quarter profit.
Burger King surged 3.5 per cent. The number-two hamburger chain returned to the New York Stock Exchange Wednesday after being delisted a year and a half ago.
The bond market was mixed. The yield on 10-year treasuries rose to 1.64 per cent from 1.62 per cent Tuesday; while that on the 30-year slipped to 2.72 per cent from 2.73 per cent.
Bond yields and prices move in opposite directions.
