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NEW YORK: US stocks ended with modest gains on Wednesday after the Federal Reserve held interest rates unchanged as expected but sent mixed signals on the sluggish economy.
The Dow Jones Industrial Average climbed 4.40 points (0.04 percent) to close at 11,811.83 and the tech-heavy Nasdaq composite rose 32.98 points (1.39 percent) to 2,401.26.
The Standard & Poor's 500 index advanced 7.68 points (0.58 percent) to finish the day at 1,321.97.
Wall Street had widely expected the Federal Open Market Committee (FOMC) to hold its base federal funds rate at 2.0 percent after a series of cuts since September to stimulate flagging growth amid housing and credit crises.
In an accompanying policy statement, the FOMC echoed comments from Fed chairman Ben Bernanke that the world's biggest economy remains weak but that the risk of a severe slump had eased.
"The Fed's policy statement is moderately bullish for the stock market, in large part because there is nothing that suggests an imminent rate hike and no evident panic over inflation," Briefing.com analysts wrote in a client note.
Global Insight's Brian Bethune said although the Fed's decision was widely anticipated by the markets, "there were a few participants that expected a rate hike. The market reaction was generally positive."
He said the Fed has a difficult period of decision making ahead of it as the inflation risk issue clearly pointed toward higher rates, but the growth outlook for the end of 2008 and 2009 "now has 'recession' printed on it."
Investor sentiment got a lift from crude oil prices that fell two dollars a barrel, analysts said.
Data on orders for durable goods - big-ticket items like refrigerators, aircraft and cars - showed stabilisation in May after two consecutive months of decline.
The Commerce Department said its durable goods index was unchanged, in line with market expectations. Orders had fallen 1.0 percent in April.
In a separate report, the Commerce Department said sales of new homes in the United States fell 2.5 percent in May from the prior month, after a surprise leap of 4.8 percent in April.
Among stocks in focus, American Express slid 2.76 percent to 40.94 dollars after warning that credit indicators had deteriorated this month "beyond our expectations."
American Express also announced an agreement with MasterCard to drop a federal lawsuit alleging it had illegally blocked Amex from the bank-issued credit card business in the US market. Under the terms of the agreement, MasterCard will pay American Express up to 1.8 billion dollars.
MasterCard leapt 3.36 percent to 289.79 dollars.
Shares in Washington Mutual plummeted 4.48 percent to 5.54 after the ailing banking firm's shareholders approved Tuesday a bailout of seven billion dollars led by investment group TPG.
Agrochemical group Monsanto sank 3.14 percent to 131.52 despite reporting strong quarterly earnings and raising its annual guidance.
Countrywide Financial, the nation's largest mortgage lender, dropped 1.72 percent to 4.58 after its shareholders approved a takeover by Bank of America and the state of California sued it for alleged deceptive practices. Bank of America edged down 0.04 percent to 26.61.
Bonds pulled back. The yield on the 10-year US Treasury bond rose to 4.115 percent from 4.105 percent on Tuesday and that on the 30-year bond was nearly flat at 4.657 percent from 4.658 percent. Bond yields and prices move in opposite directions. - AFP/de
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