NEW YORK, Dec. 12 (Xinhua) -- U.S. stocks erased early gains and ended little changed on Wednesday despite Federal Reserve decision to continue its asset-buying program and extend the Operation Twist, as concerns over the so-called "fiscal cliff" mounted.
The Federal Open Market Committee concluded a two-day policy meeting on Wednesday and it decided to expand its asset-buying plan as expected.
The FOMC will continue purchasing additional agency mortgage- backed securities at a pace of 40 billion dollars per month. The asset buying plan was launched in September, also known as the third round of quantitative monetary easing program.
The Committee will also purchase longer-term Treasury securities after its Operation Twist program, which is designed to extend the average maturity of its holdings of Treasury securities, is completed at the end of the year, initially at a pace of 45 billion dollars per month.
Moreover, the FOMC maintained the benchmark federal funds rate near 0 percent and would keep the ultra low rate as long as the unemployment rate remains above 6.5 percent, and the inflation rate is under 2.5 percent between one and two years ahead.
The FOMC said in a statement that "taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."
As the deadline for the spending cuts and tax increases of U.S. government to take effect automatically is drawing closer, concerns over the issue has been growing.
President Barack Obama reduced his demand for tax increases in the budget to 1.4 trillion dollars from 1.6 trillion dollars on Tuesday, while House Speaker John Boehner said Wednesday the president's revenue demand can't pass the House or the Senate. But Boehner earlier said on Tuesday that he was "hopeful" the two parties can reach a budget agreement before the end of the year.
When the market closed, the Dow Jones Industrial Average lost 2. 99 points, or 0.02 percent, to 13,245.45. The Standard & Poor's 500 rose 0.64 points, or 0.04 percent, to 1,428.48. The Nasdaq Composite Index was down 8.49 points, or 0.28 percent, to 3,013.81.
|
