NEW YORK — Stocks ended mostly lower after a volatile day as traders tried to figure out what was next for U.S. interest rates.
The bumpy trading Thursday came after the Federal Reserve decided to keep interest rates low for now, citing weakness in the global economy and unsettled financial markets.
Investors did make significant bets on U.S. Treasurys and, for a change, precious metals. The U.S. dollar weakened against its major currency counterparts as the threat of higher interest rates abated.
The Dow Jones industrial average lost 65.21 points, or 0.4 percent, to 16,674.74. The Standard & Poor’s 500 index fell 5.11 points, or 0.3 percent, to 1,990.20, and the Nasdaq Composite index rose 4.71 points, or 0.1 percent, to 4,893.95.
The Fed said that while the U.S. job market is solid, there are reasons to be concerned about global economic growth. Fed Chair Janet Yellen said a rate hike is still likely this year. The Fed meets again in October and December.
“The market got what it wanted,” said Alan Rechtschaffen, a portfolio manager at UBS. “The market had a ‘rate rant’ last month and that scared the Fed.”
Ultra-low interest rates tend to help the stock market because they make bonds, CDs and other income-producing investments less appealing by comparison.
On the other hand, the Fed has made it clear that the current policy of low rates is an unusual measure intended to shore up the economy and will eventually be dismantled. Keeping it in place is a signal that the Fed believes the economy isn’t quite strong enough to withstand higher rates. For investors wondering when interest rate policy will be “normalized,” that means more waiting.
With interest rates not changing soon and inflation in check, investors bought up bonds. The yield on the U.S. 10-year Treasury note dropped to 2.19 percent from 2.30 percent the day before, a large move. The two-year Treasury note, which would be more heavily impacted by higher short-term interest rates, had an even more dramatic move, dropping to 0.68 percent from 0.80 percent. Gold fell $2 to settle at $1,117 an ounce in regular trading but was up $12.80 to $1,131.80 an ounce later. Silver added 10 cents to settle at $14.98 an ounce, and gained another 25 cents to $15.13 in extended trading.
Oil finished slightly lower after the Fed’s comments. U.S. crude fell 25 cents to $46.90 a barrel. Brent crude, a benchmark for many international oils imported by U.S. refineries, fell 67 cents to $49.08 a barrel.
