NEW YORK - Wall Street managed a tiny gain Wednesday, enough to give the Dow Jones industrial average another record close, after the Federal Reserve stoked some fears of inflation pressures but implied that it's not intent on raising interest rates.
The Fed's Open Market Committee kept the nation's benchmark rate unchanged at 5.25 percent for a third straight meeting, but it noted in its accompanying policy statement that readings on inflation have moved higher recently. Stocks waffled after the Fed's decision was released as investors worried that inflation concerns could prompt the central bank to resume its rate increases in the future.
There may also have been some disappointment on Wall Street because "it's not a sign that the Fed is going to be cutting rates anytime soon," said Drew Matus, senior economist at Lehman Brothers.
Still, the market held up well. There were really few, if any, surprises in the Fed's statement, which described the economy as likely to grow at a moderate pace after more than two years of rate increases.
"I think that the stock market, if it has one mind, is saying the soft landing is in place, that the Fed is on hold for a while," said Jerry Webman, chief economist at Oppenheimer Funds.
"The stock market thinks the Fed just patted them on the back and said, go ahead boys and girls," Webman said.
The Dow rose 6.80, or 0.06 percent, to 12,134.68. After the Fed announcement, the Dow reached another new trading high of 12,147.97 before pulling back; it also set new trading and closing records the previous session.
Broader stock indicators also closed higher. The Standard & Poor's 500 index rose 4.84, or 0.35 percent, 1,382.22, putting it at a nearly six-year high. The Nasdaq composite index rose 11.75, or 0.50 percent, to 2,356.59.
Bonds rallied, with the yield on the benchmark 10-year Treasury note falling to 4.76 percent from 4.82 late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude settled up $2.05 at $61.40 a barrel on the New York Mercantile Exchange after a weekly Energy Department report showed an unexpected drop in crude inventories. Meanwhile, sentiment has grown in recent days that OPEC production cuts might help shore up oil prices. On Friday, oil prices fell to their lows for the year.
The Fed comments, which Webman notes again signal that the central bank "isn't going to stand for inflation," will likely mean investors already skittish about rising interest rates will be even more sensitive to news of rising prices. To keep inflation in check, the Fed raised interest rates 17 straight times before pausing in August. Fears have subsided somewhat that the Fed was overzealous in its efforts to hold back inflation and had perhaps thrown too much cold water on the economy.
As investors try to gauge the health of the economy they also looked at quarterly reports Wednesday from big names like GM and Altria Group Inc., the parent of tobacco-products maker Philip Morris.
Investors have also paid close attention to economic news as they try to determine how quickly the economy is slowing and whether it can pull off a soft landing. One possible area of concern was a report from the Chicago Fed that showed its National Activity Index fell to its lowest readings in 11 months in August.
The market had little reaction to a report early in the session from the National Association of Realtors that existing home sales declined 1.9 percent to a seasonally adjusted sales pace of 6.18 million units, marking the slowest sales rate since January 2004. Also, the median price of a home registered a sharp drop.
In corporate news, GM fell $1.48, or 4.1 percent, to $34.71, despite reporting that its third-quarter loss narrowed as cost-cutting aspects of its turnaround plan began to take hold and as sales rose about 4 percent. The world's largest automaker said its loss for the quarter fell to $115 million, or 20 cents per share, from $1.7 billion, or $2.94 per share, a year earlier.
Altria rose $2.28, or 2.9 percent, to $82.10 after saying it plans to announce in January plans for a spinoff of Kraft Foods Inc. and despite reporting third-quarter results that came in slightly below Wall Street's expectation.
Boeing Co., like GM and Altria part of the 30 stocks in the Dow, fell $2.73, or 3.3 percent, to $80.86 after the No. 2 commercial aircraft maker behind Airbus saw its third-quarter profit fall 31 percent as the company recorded expenses to discontinue an in-flight Internet service.
Amazon.com Inc. advanced $4.05, or 12 percent, to $37.68 after the Internet retailer reported a stronger-than-expected third-quarter profit following a disappointing second quarter.
Taser International Inc., which makes stun guns, rose 25 cents, or 2.7 percent, to $9.45 after posting a sharp increase in third-quarter earnings.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.94 billion shares, compared with 2.83 billion shares Tuesday.
The Russell 2000 index of smaller companies was up 4.72, or 0.62 percent, at 767.15.
Overseas, Japan's Nikkei stock average closed down 0.48 percent. Britain's FTSE 100 closed up 0.52 percent, Germany's DAX index was up 0.28 percent, and France's CAC-40 was up 0.33 percent.