Broader stock indicators also closed higher after struggling all day to chart a course. Ga. On Tuesday, the Dow fell 16.52, recovering from a 112-point slide that followed the Fed's decision to leave interest rates unchanged. But a warning from the Fed that rates are likely to rise if inflation reawakens left the market jittery Wednesday. Bond traders ultimately welcomed the Fed's determination to quell inflation, and pushed the yield on the 30-year Treasury bond down to 5.8 percent from 5.88 Tuesday. That helped lift stocks.
Stocks suffer if rising bond yields offer investors a more attractive investment option.
Banking and brokerage stocks, which have slipped in recent sessions, rose along with bonds Wednesday. But analysts said investors are still wondering what the next market trend will be, and many remain on the sidelines. While the market outpaced the sluggish sessions leading up to the Fed's announcement, volume remained light on the New York Stock Exchange. Technology stocks illustrated the market's divergent path. The company reported massive losses in its most recent quarter, but said the number of people using its Web site rose.