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NEW YORK -- Investors reawakened to the possibility of higher interest rates today after the Federal Reserve warned that inflation remains a risk to the economy. The Fed's assessment wiped out solid gains on Wall Street, with investors fearing higher rates that would further erode corporate earnings. Dow up 26.54
Associated Press
The Fed's warning, which accompanied a decision to leave interest rates untouched for now, halted the stock market's first rally since the election and sent the Dow Jones industrial average falling from a gain of 115 points into negative territory. But the Dow managed to close up 26.54 at 10,707.60. The tech-focused Nasdaq composite index ended the session up 27.22 at 3,165.49 and the Standard & Poor's 500 index gained 7.09 at 1,390.04.
Advancers led decliners by a nearly 4-to-3 ratio with 1,657 up, 1,188 down and 470 unchanged on the New York Stock Exchange where volume was 1.06 billion vs. yesterday's 1.11 billion. The NYSE composite index rose 2.57 to 651.09; the American Stock Exchange composite index gained 2.37 to 901.74; and the Russell 2000 index climbed 4.88 at 491.79.
The 10-year Treasury note's price was up 9/32 point, or $2.81 per $1,000 in face value; its yield fell to 5.71 percent from 5.75 percent late yesterday. The 30-year bonds were up 23/32 point and yielded 5.77 percent, down from 5.81 percent late yesterday.
The Fed said rising energy prices still pose an inflation risk for the coming months. Its decision gives investors, who since last month have endured a string of poor earnings reports, new reason to fear falling profits.
The announcement took Wall Street by surprise. Earlier today, investors put aside some of their worries about earnings and the presidential election and bid stocks higher, hoping the Fed would be inclined to lower rates in the future.