Stocks end mixed
after Fed hikes rate

NEW YORK » Stocks stumbled to a mixed finish yesterday as the Federal Reserve kept to its policy of gradual interest rate hikes, but provided little new insight into the health of the economy.

The Fed's Open Market Committee announced a widely expected quarter percentage point hike in the nation's benchmark lending rate, to 3 percent, and said future rate hikes would remain "measured," a phrase designed to ease investors' fears of more aggressive increases.

Most of the statement that accompanied the latest rate move was unchanged from the Fed's March 22 meeting, stating that long-term inflationary pressures "remained well contained."

The central bank acknowledged that higher energy prices are starting to slow spending growth, but that wasn't enough for the Fed to abandon its approach to rate hikes.

"It's pretty much the same as last time, and it shows the Fed's not overly pessimistic about the economy," said Jack Ablin, chief investment officer with Harris Private Bank in Chicago. "The fact that they're not changing their underlying longer-term strategy here adds a certain degree of comfort for investors."

The Dow Jones industrial average rose 5.25, or 0.05 percent, to 10,256.95. The Dow had been down 46 points five minutes before the close, but surged into positive territory after the Fed amended its policy statement to add the wording about inflation being contained, which had been inadvertently omitted.

Broader stock indicators finished narrowly mixed. The Standard & Poor's 500 index was down 0.99, or 0.1 percent, at 1,161.17. The Nasdaq composite index gained 4.42, or 0.23 percent, at 1,933.07.

Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.67 billion shares, compared with 1.57 billion at the same point Monday.

The Russell 2000 index of smaller companies was down 1.38, or 0.24 percent, at 584.48.

Falling crude prices gave a little support to stocks, with a barrel of light crude settling at $49.50, down $1.42, on the New York Mercantile Exchange. The bond market slipped lower, with the yield on the 10-year Treasury rising to 4.20 percent from 4.19 percent late Monday. The dollar was mixed against other currencies in European trading, and gold prices fell.

While stocks have recovered modestly from a terrible April, Wall Street had been hoping that a strong, positive statement from the Fed would help stocks push upward even further. Uncertainty over the economy has kept stocks from moving substantially off their 2005 lows.