Wall Street mixed on Fed's modest action

New York, June 21 (IANS) US stocks ended mixed Wednesday on the Federal Reserve's modest monetary policy.

The Fed said Wednesday that it will continue Operation Twist through the end of the year. Under the programme, the central bank will swap short term government debt with long term bonds, in an effort to push down the long term interest rate, reports Xinhua.

The action taken by the Fed was considered as modest, as many investors expected a new round of quantitative easing plan, such as assets-purchasing programmes.

If the Fed pushed the more aggressive one, it will boost more liquidity into market. Investors believed that more liquidity may uplift equity market.

The Fed's Chairman Ben Bernanke said at a press conference following the release of the policy statement Wednesday that the current economic situation was not entirely clear, thus it's not a proper time to boost aggressive monetary policies.

However, Bernanke indeed left space for more easing plans in future. "Investors hopes that the Fed was setting up something more aggressive for Aug 1," Stephen J. Guilfoyle, US economist from Meridian Equity Partners Inc told Xinhua.

He believed that the Fed did what was previously expected. "We watched, we dipped, and then we ripped," said Benedict P. Willis, managing director from Albert Fried & Company, LLC. According to him, some progress in Europe helped uplifting the market.

What he meant was that the European Union leaders will discuss Friday about using the EU's rescue funds to bailout Italy and Spain by buying their debt on the financial markets.

Positive news from the Europe gave equity market some confidence, although not very much.

The Dow Jones industrial average lost 12.94 points, or 0.10 percent, at 12,824.39. The Standard & Poor's 500 was down 2.29 points, or 0.17 percent, to 1,355.69. The Nasdaq Composite Index added 0.69 points, or 0.02 percent, to 2,930.45.

Crude prices tumbled Wednesday as US crude inventories increased sharply last week.

Light, sweet crude for July delivery fell by $2.23, or 2.65 percent to settle at $81.80 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery also declined to a 17-month low and last traded around $93 a barrel.

The US dollar rose against major currencies in late New York trading Wednesday after the Federal Reserve decided to extend the Operation Twist to the end of the year.