NEW YORK — It’s going to take more than low interest rates to fire up investors.
The Federal Reserve’s latest plan to help the economy failed to impress Wall Street on Wednesday. Stocks finished slightly lower for the day, and not much better than they were before the Fed announcement.
The Fed said it would keep its “Operation Twist” program going through the end of the year rather than let it expire at the end of this month. It aims to keep long-term interest rates low by selling the Fed’s short-term U.S. government debt and buying long-term debt.
Economists have pointed out that long-term interest rates are already near record lows, and that consumers and businesses who aren’t borrowing today won’t necessarily borrow tomorrow just because it’s a little cheaper.
The Fed also sharply lowered its outlook for U.S. economic growth. Chairman Ben Bernanke said the economy would grow no more than 2.4 percent this year, down from an April forecast of no more than 2.9 percent.
“What the markets really don’t like was he ratcheted down growth sharply,” said Doug Cote, chief market strategist at ING Investment Management.
The Dow Jones industrial average closed down 12.94 points, or a tenth of a percent, at 12,824.39. The Standard & Poor’s 500 index fell 2.29 points, or 0.2 percent, to 1,355.69. The Nasdaq composite index rose 0.69 points to 2,930.45.
Indexes dipped right after the Fed’s announcement came out at 12:30 p.m., then quickly went back to where they were. It was the latest knee-jerk response to headlines in a stock market that has been buffeted by fears that the euro could rupture.
“It’s obvious we’re still in a trader’s market, and it’s a market that is still responding to news events, including the Fed, almost hour by hour, if not minute by minute,” said Quincy Krosby, a market strategist with Prudential Financial.
Randy Warren, chief investment officer for Warren Financial Service, lamented the focus on the Fed, saying investors should be thinking about where to put their money, considering Europe’s problems and a weak euro.
“There’s plenty to choose from for investors,” he said. “They just have to think more than five minutes ahead.”
