NEW YORK — A weaker economic forecast from the Federal Reserve chilled the stock market’s winning streak.
Stocks closed mixed Wed nesday, with the Dow Jones industrial average rising 4 points for its seventh straight advance.
The other major market indexes also had single-digit moves. Bond prices rose as investors, again uneasy about the strength of the economic recovery, went in search of safe investments.
The Fed’s economic forecast was only slightly more downbeat than the outlook issued in April. And investors have been well aware that the country faces a bumpy recovery. But the Fed’s assessment was still a sharp reminder that economic growth won’t come easy.
Investors initially sold on the Fed’s statement. A strong start to second-quarter earnings reports, including upbeat forecasts from Intel Corp. and Alcoa Inc., helped temper their disappointment.
The Fed lowered its projection for the gross domestic product, the broadest measure of the economy, and said GDP will grow between 3 percent and 3.5 percent this year. That’s down from the 3.2 percent to 3.7 percent forecast in April.
The central bank also said the unemployment rate, now at 9.5 percent, will at best fall to 9.2 percent. In its April forecast, the Fed had a slightly lower bottom number of 9.1 percent.
The Fed also released minutes from its June 22-23 meeting, at which it found that “economic developments abroad” could hurt the U.S. economy. That’s a reference to the debt crisis that began in Greece and threatened to spread to other European countries.
The Dow rose 3.70, or 0.04 percent, to 10,366.72. The Standard & Poor’s 500 fell 0.17, or 0.02 percent, to 1,095.17, while the Nasdaq composite rose 7.81, or 0.4 percent, to 2,249.84.
Stocks slumped in May and June as economic reports showed the recovery wasn’t proceeding as fast as hoped. It wasn’t clear Wednesday afternoon whether stocks would resume their slide or go up on the next strong earnings report.
“You have a classic tug of war — profits for the second quarter are quite good,” said Joseph Battipaglia, market strategist for the Private Client Group at Stifel Nicolaus & Co. “On the other hand, you have a growing list of data points that show the stimulus is not leading to a private-sector recovery.”
