June 23rd, 2010
06:54 PM ET

Stocks mixed, dollar falls after Fed decision

A look at highlights from the day's business news:

Stocks end volatile session mixed

Stocks ended mixed Wednesday as investors struggled to balance the Federal Reserve's statement, a weak housing market report and a selloff in commodity prices amid the stronger euro.

The Dow Jones industrial average added a few points. The S&P 500 lost 3 points, or 0.3 percent, and the Nasdaq composite dropped 7 points, or 0.3 percent.

The central bank opted to hold the fed funds rate, a key overnight banking rate, steady at historic lows near zero. In its closely watched statement, the bankers said the economic recovery is proceeding and the labor market is "improving gradually."

But the bankers also cautioned about the weakness in the housing market and the "less supportive" financial conditions as a result of the "development abroad," meaning the European debt crisis.

Oil prices drop

Oil prices sank Wednesday after a weekly government report showed a surprise build in crude supplies and the Federal Reserve said it will continue to hold interest rates near zero.

Crude oil futures for August delivery slipped $1.50, or 1.9 percent, to settle at $76.35 a barrel. Earlier, the price fell as much as 3.4 percent to $75.17 a barrel.

The national average price for a gallon of regular unleaded gas increased to $2.741, up 0.9 cent from the previous day's $2.732, according to AAA.

The Energy Information Administration reported a surge in crude stocks of 2 million barrels in the week ended June 18, surprising analysts who were expecting a drop of 1.5 million barrels, according to a consensus estimate collected by energy information provider Platts.

Dollar falls after Fed rate decision

The dollar fell against major currencies Wednesday after the Federal Reserve kept its interest rate policy unchanged.

The dollar fell 0.3 percent against the euro to $1.2311, and slipped 0.8 percent to ¥89.84 against the Japanese yen.

The pound extended gains, rising 1 percent against the dollar to $1.4963 after the U.K. announced its most severe budget cut in decades on Wednesday.

The Federal Reserve on Wednesday said it would keep its key interest rate target unchanged at between 0 percent and 0.25 percent.

The rate decision had little impact on currency prices, since interest rates were widely expected to be held near historical lows. Still, investors will scrutinize the statement for any signs that the central bank plans to raise rates in the near future.

Treasurys extend rally

Treasurys rallied Wednesday, sending the yield on the benchmark note to its lowest level in a year, as investors reacted to a record drop in new home sales and a big auction of U.S. debt, while taking an unsurprising statement from the Federal Reserve in stride.

At 2:25 p.m. ET, about 10 minutes after the Fed's announcement, the benchmark 10-year note was up 17/32 to 103-11/32. Its yield fell to 3.11 percent, down from 3.16 percent late Tuesday, hitting a 52-week low. Bond prices and yields move in opposite directions.

The 30-year bond rose 29/32 to 105-17/32 and yielded 4.06 percent. The two-year note gained 7/32 to 99-30/32. Its yield rose to 0.67 percent from a median yield of 0.72 percent at Tuesday's auction.

Treasury investors were awaiting the latest decision from the Fed, which said Wednesday it will continue to hold rates steady near historic lows. The central bank said it sees the "economic recovery is proceeding and that the labor market is improving gradually."

The announcement wasn't much of a surprise to Treasury analysts, who were
expecting the Fed to maintain its status quo language in referencing the economic recovery.

CNNMoney.com reporters Alexandra Twin, Ben Rooney, Hibah Yousuf and Blake Ellis contributed to this report.

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