Fed Slows Momentum for Most ETFs

Stocks took another big swing Wednesday afternoon, giving back most gains after the Federal Reserve said it will continue its policy of low interest rates, now at zero to 0.25%. Indexes and exchange-traded funds closed mixed.

The Dow Jones Industrial Average closed up 30 points at 9802, off its intraday high of 9928. The Nasdaq dropped 2 to close at 2056 and the S&P 500 was up 1 at 1047.

The Federal Reserve Open Markets Committee concluded its October meeting today and released minutes this afternoon, saying it anticipates keeping "an exceptionally low level of rates" that would continue "for an extended period" as economic conditions improve, a repetition of a closely watched phrase from the last meeting.

The question wasn't whether the Fed would change interests from current near-zero levels, but whether it would provide any signals as to a withdrawal of some of the extraordinary measures it's enacted to limit the damage from the credit crunch.

"Any such change would be a big event for risky assets, which have been well supported by generous liquidity conditions," analysts at Societe Generale said in a note. They suggested buying the dollar on dips on the "hunch" that concerns over growth, global liquidity and the bank sector will send investors away from perceived riskier assets.

A closely watched employment report from Automatic Data Processing and Macroeconomic Advisors showed private-sector payrolls declined by 203,000 last month, meeting the expectations of economists surveyed by Dow Jones Newswires. The government will issue its monthly payrolls report on Friday.

Crude futures inched higher Wednesday amid gains in European stock markets and a weaker dollar, but cautious sentiment ahead of U.S. oil inventories data and the Fed's policy statement kept a lid on further gains. As of 4:06 p.m., the front-month December light, sweet, crude contract on the New York Mercantile Exchange traded up 58 cents at $80.18 a barrel. Long-term forecasts called for a more moderate rate of global demand increases. For a detailed rundown on Wednesday’s trading session see our market story. 

Gains on the Kospi index pushed shares of the iShares MSCI South Korea Index fund (EWY) up 2.8%. The Vanguard Emerging Markets Stock Index fund (VWO) rose 2.6%, lifted mainly by Asian markets.

Eroding gas prices dropped shares of the United States Natural Gas fund (UNG) by 3.0%. The iShares Cohen & Steers Realty Majors Index fund (ICF) dropped 2.1%, as the Fed ruling indicated a relatively weak belief in the strength of the recovery.

Earnings and Conference Calls
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Economic Data
8:30 a.m. Jobless Claims
8:30 a.m. Productivity and Costs
9:00 a.m. RBC CASH Index
10:30 a.m. EIA Natural Gas Report
4:30 p.m. Fed Balance Sheet
4:30 p.m. Money Supply