By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks on Wednesday retreated
some from five-year highs after the Federal Reserve said U.S.
"economic activity had paused in recent months" and maintained its
monetary policy.
Most had expected the Federal Open Market Committee to upgrade
its assessment of the economy, yet the Fed "did not sound any more
optimistic about the economic backdrop," said Dan Greenhaus, chief
global strategist at BTIG LLC.
Jim Russell, senior equity strategist and regional investment
director, U.S. Bank Wealth Management, said the central bank could
have given "a nod to the slight improvement in the labor market
nationwide."
The stock indexes tallied modest losses in the wake of the Fed's
release, which had the central bank holding interest rates near
zero while maintaining its bond-buying program.
Up 6.3% month-to-date and on track for its best January in 24
years, the Dow Jones Industrial Average (DJI) was lately off 27.61
points, or 0.2%, to 13,926.81.
"A lot of the market's rise is due to global central banks being
more accommodative," said Russell, who also noted the FOMC has four
new members, collectively viewed as "slightly more hawkish," a
reference to those more concerned with curbing inflation than in
keeping interest rates down.
Boeing Co. (BA) was among blue-chip gainers after the aircraft
maker reported quarterly earnings and revenue that beat Wall
Street's estimates.
The S&P 500 index (SPX) dropped 3.4 points, or 0.2%, to
1,504.44, with the industrial sector the worst performer and
utilities the best of its 10 major industry groups.
U.S.-listed shares of BlackBerry maker Research In Motion Ltd.
(RIMM) fell 7.8% after the Canadian company said it would change
its name to BlackBerry.
The Nasdaq Composite (RIXF) fell 5.18 points, or 0.2%, to
3,148.47, with the technology-laden index getting some support by a
5% rise in shares of Amazon.com Inc. (AMZN) a day after the online
retailer reported better-than-expected fourth-quarter gross profit
margins.
Social-networking company Facebook Inc. (FB) climbed 1.5% ahead
of its quarterly earnings report expected after Wednesday's
close.
For every five stocks that rose, nine fell on the New York Stock
Exchange, where 416 million shares traded as of 3 p.m. Eastern.
Composite volume exceeded 2.6 billion.
Stocks had fluctuating between small gains and losses after
reports showed the economy contracted in the final quarter of 2012
but better-than-anticipated payrolls growth in January.
"That's probably the most favorable contraction in GDP that you
could have hoped for," said Russell at U.S. Bank of the 0.1% annual
rate decline in gross domestic product, which was largely due to a
sharp drop in military spending and a smaller gain in
stockpiles.
The Commerce Department reported fourth-quarter gross domestic
product dropped at a 0.1% annual rate, the worst performance since
the second quarter of 2009, when the economy remained in
recession.
A separate report from a payrolls processor said private
companies added 192,000 workers in January, with the
better-than-expected rise coming ahead of Friday's nonfarm payrolls
report for January.
Treasury prices dropped on Wednesday, with the benchmark 10-year
yield (10_YEAR) rising 1 basis point to 2.009%.
The U.S. dollar (DXY)fell against other global currencies,
including the euro (EURUSD).
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