NEW YORK (CNN/Money) -
Techs fell on Cisco's earnings, while the broader market ended mixed Wednesday, as investors took in stride an expected rate hike from the Federal Reserve.
The Nasdaq composite (down 8.77 to 2,034.56, Charts) lost 0.4 percent.
The Dow Jones industrial average (down 0.89 to 10,385.48, Charts) and the Standard & Poor's 500 (down 1.17 to 1,162.91, Charts) index both closed little changed.
All three indexes had popped shortly after the Fed's move, before retreating to pre-announcement levels.
The central bank opted to lift a key short-term interest rate for the fourth time this year, by another quarter-percentage point, to 2 percent -- a move widely expected on Wall Street.
In its statement, the bank said it can unwind unusually low rates at a pace "likely to be measured" -- the same language it used in September -- which leaves the door open for another hike when Fed policy-makers meet next month.
"They are being as clear as they possibly can be about raising rates in December without knowing what the data will be in the next month," said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc.
The Fed's statement was little changed from the September statement, Shapiro noted, however, the tone was a little more positive regarding the labor market, following the strong October payrolls report. The Fed statement also noted that output was still growing "despite the rise in energy prices."
Treasury bonds rallied after the statement but then gave back those gains. The 10-year note ended slightly lower, pushing its yield up to 4.24 percent from 4.22 percent late Tuesday. Bond prices and yields move in opposite directions.
The dollar showed little reaction to the Fed news, while oil prices built on earlier gains.
Looking forward, what's supportive for the market through the rest of the year is that a certain amount of uncertainty has been removed, said Michael Carty, principal at New Millennium Advisors, citing the uncontested presidential election, the recent stabilizing in oil prices, and the greater clarity about Fed action.
"I think the market is likely to rise into the end of the year, although, granted, that's in fits and starts," he added.
After the close Wednesday, Starbucks (Research) reported earnings of 25 cents per share, up from 17 cents a year ago and in line with estimates. The specialty coffee retailer also issued a fiscal 2005 earnings forecast that is just short of expectations, and shares fell 3 percent in after-hours trade.
A slew of retailers report earnings before the start of trading Thursday including Target (Research), Tiffany & Co (Research) and American Eagle Outfitters (Research).
What moved?
In corporate news, Cisco Systems (down $1.31 to $18.44, Research) sank 6.6 percent and topped the Nasdaq's most-active list after reporting quarterly results late Tuesday. Earnings rose from a year ago and met estimates. But revenue and gross margins were short of estimates.
Merck (up $0.41 to $26.41, Research), Boeing (up $0.89 to $53.40, Research) and Walt Disney (up $0.39 to $26.66, Research) all gained, giving the Dow some support, but countering that was weakness in Hewlett-Packard and other components, putting a cap on any blue-chip advance.
Both Hewlett-Packard (down $0.73 to $18.97, Research) and Dell (down $0.58 to $36.85, Research) fell after UBS downgraded the PC makers to "neutral" from "buy."
Intel (down $0.22 to $22.86, Research) and other chipmakers declined. The Philadelphia Semiconductor (down 10.04 to 405.76, Charts) index, or the SOX, fell 2.4 percent.
Pfizer (down $0.52 to $27.47, Research) was under pressure on concerns about its arthritis treatment Bextra. Preliminary findings from a study showed a higher number of heart attacks and strokes among patients who took Bextra, versus a placebo group. The study was presented at an American Heart Association meeting Tuesday and reported in the New York Times Wednesday.
Pfizer said that the heart problem with Bextra was limited to patients at very high risk for heart disease who were undergoing cardiac surgery, and that this had already been disclosed in mid-October.
Rival Merck was forced to pull its arthritis treatment Vioxx off the shelves in September due to similar concerns.
In other news, Advanced Medical Optics said it will buy Visx, a maker of laser vision correction equipment, for about $1.3 billion. Advanced Medical Optics (down $3.64 to $38.80, Research) fell more than 8.5 percent on the news, while shares of Visx (up $6.26 to $24.36, Research) rallied nearly 35 percent.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners 9 to 7 on volume of nearly 1.5 billion shares. On the Nasdaq, winners edged losers 8 to 7 on volume of nearly 1.86 billion shares.
Oil spikes on Fed, inventories
Oil prices rose after the morning inventory data, but then built on that following the Fed rate hike.
U.S. light crude for December delivery rose $1.49 to settle at $48.86 a barrel on the New York Mercantile Exchange
A morning report showed an increase in domestic stockpiles last week, but one that came in below analysts' forecasts. Distillate inventories, which include heating fuel and diesel fuel, showed a decline last week, when economists were expecting a rise.
A report released before the open showed a narrowing of the trade gap that put the deficit slightly below estimates. A separate report showed a slight rise in weekly jobless claims, also below estimates.
In currency trading, the dollar gained versus the euro, recovering after the European currency rose to $1.30 for the first time. The greenback rallied versus the yen.
COMEX gold fell $1.70 to settle at $436.20 an ounce.
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