Stocks lukewarm after Fed rally fizzles
Stocks ended little changed Wednesday after a rally prompted by the Federal Reserve's latest economic stimulus program fizzled out.
The Dow Jones industrial average closed down 2.99 points at 13,245.45. It had risen as much as 81 points after the Fed said earlier in the day that it would extend a bond-buying plan and keep interest rates extremely low.
The Standard & Poor's 500 index finished up 0.04 percent at 1,428.48. The Nasdaq composite index fell 0.28 percent to 3,013.81.
The Fed said it will keep spending $85 billion a month on bond purchases to drive down long-term borrowing costs and stimulate economic growth. Of that amount it will spend $45 billion on long-term Treasury purchases to replace a previous bond-buying program of equal size.
The enthusiasm over the Fed's early afternnon announcement was short-lived. It briefly drew investors' attention away from the "fiscal cliff" budget talks taking place in Washington. Also, the amount of bond buying the central bank said it would undertake was in line with what investors were expecting, Joseph Tanious, a Global Market Strategist with J.P. Morgan Funds, said.
"What's holding markets hostage," Tanious said, "is uncertainty around the fiscal cliff."