Stocks were mostly lower after gyrating on both sides of unchanged as investors offered a muted reaction to the Federal Reserve's interest-rate cut and warning that the U.S. economy remains at risk for a slowdown.
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The Fed announced in mid-afternoon it was lowering short-term rates by 0.25 percentage point, half of what the market felt was necessary to restart the economy. It was the sixth cut this year.
Soon after the decision, the Dow Jones industrial average fell 45.29 10,427.19 after rising about 25 before the announcement.
The broader market also fell. The Nasdaq composite index fell 9.51 to 2,055.11, while the Standard & Poor's 500 index was off 7.63 at 1,209.13.
"I think the market is a little disappointed, but a quarter of a point is winning the derby anyway — the consensus was leaning that way," said Milton Ezrati, senior economic strategist at Lord Abbett & Co. "But this shows the Fed is not as afraid as it might have been about the economy. It leaves the Fed some dry powder for another cut should it become necessary."
The Dow finished with a loss of 37.30 points, or 0.36 percent, at 10,435.18, and the Standard & Poor's 500 fell 5.69 points, or 0.47 percent, to 1,211.07. The Nasdaq closed 10.11 points, or 0.49 percent higher, at 2,074.73.
Investors have been anxiously awaiting signs that the five prior reductions — each 0.5 percentage point — have helped business pick back up. But so far, corporate earnings announcements have indicated that business remains weak in many sectors.
Analysts did not expect a rally to follow this latest increase, regardless of its size.
"I think the market is looking for real fundamental guideposts for true traction for a turnaround," said Philip S. Dow, managing director of equity strategy at Dain Rauscher Wessels in Minneapolis.
Dow said that evidence would include positive signs about corporate earnings, companies announcing they are hiring or opening new plants, or encouraging government reports on the state of the economy.
"Those just aren't coming," he said.
"The cumulative amount of the easing has been large and now is the time to begin tempering that," said Carl Tannenbaum, chief economist at LaSalle Bank in Chicago.
"The fundamentals aren't as bad as we thought and there is not the sense of impending doom as there was earlier this year," he said. "The stock market would have certainly benefited from a bigger cut because that would have improved earnings, but it is not the Fed's job to give us booming markets."
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Among the session's biggest losers was CVS, which plunged $7.18 to $36.92. The nation's second-largest drugstore operator warned that its earnings for the second quarter and for the year will be lower than expected because weak sales.
But most of the market's gains and losses were more moderate.
Lucent fell 13 cents to $5.87, on a report in The Wall Street Journal that the company might lay off an additional 10,000 workers because of continued restructuring.
General Mills rose 25 cents to $42.55 after the maker of Wheaties, Cheerios and Chex reported earnings that met analysts' expectations.
The Russell 2000 index, the barometer of smaller company stocks, rose 2.74 to 493.56.
Advancing issues outnumbered decliners 3 to 2 on the New York Stock Exchange, where volume was 676.98 million shares.
Stocks ended mixed for the second day in a row Tuesday, as Wall Street held its breath before the Fed meeting and Merrill Lynch walloped Wall Street with a profit warning.
The Nasdaq Composite Index rose 13.5 points, or 0.66 percent, at 2,064.37. The blue-chip Dow Jones industrial average finished with a loss of 31.74 points, or 0.3 percent, at 10,472.48. The broad Standard & Poor's 500 Index fell 1.84 points, or 0.15 percent, at 1,216.76.
The Associated Press and Reuters contributed to this report