Stocks end volatile day higher after Fed statement

But, for the moment, it appears policymakers remain on track in their thinking about the economy. The Fed expects moderate economic growth even though credit conditions have tightened for some customers and business.

Analysts believe there wasn't too much new in this statement compared to comments issued after their previous meeting — and that in itself might have led to the market's volatility. Some investors were looking for a stronger statement about credit markets, where others might have been listening for indications of a rate cut or signs inflation is waning.

"Nobody was surprised, at the Fed's language. There wasn't any positive or really negative news," said Brett Hammond, chief investment strategist for TIAA-CREF. "Beyond seeing a concern about inflation, now they've acknowledged the credit crunch and volatile markets — it has stuck in people's minds that they are pointing these things out."

In corporate news, Marsh & McLennan fell $1.54, or 5.6%, to $26.11. The largest U.S. insurance brokerage turned in a 3% increase in its second-quarter profits amid growth in its risk and insurance business and consulting operations. The company also approved a $1.5 billion share-repurchase plan.

Duke Energy rose 96 cents, or 5.4%, to $18.86. It reported second-quarter profit fell $1.27 percent after it spun off its natural gas business at the beginning of the year.

Tyco International shed 56 cents to $47.44 after it fell to a fiscal third-quarter loss due to hefty charges primarily related to a legal settlement. Adjusted results managed to top Wall Street's expectations, however.

Advancing issues outpaced decliners by a 3 to 2 basis on the New York Stock Exchange, where volume came to 2.14 billion shares.

Overseas, European markets rose higher following Monday's U.S. advance. London's FTSE 100 closed up 1.9%, Germany's DAX index rose 0.9%, while France's CAC-40 rose 1.6%. Japan's Nikkei stock average closed up 0.04%.

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