NEW YORK (AFP) - US stocks ended little-changed as markets digested a widely anticipated rate hike by the Federal Reserve and a statement suggesting more increases are on the way.
The Dow Jones Industrial Average was down a fractional 0.89 point at 10,385.48 and the Nasdaq composite fell 8.77 points (0.43 percent) to 2,034.56.
The main broad-market indicator, the Standard and Poor's 500 index, was nearly flat, losing 1.17 points (0.10 percent) to 1,162.91.
As expected, the Federal Reserve boosted the federal funds rate to two percent from 1.75 percent, the fourth rate hike of the year.
But the move had little impact on the market as the rate hike had been widely anticipated and an accompanying Fed statement left its outlook on the economy nearly unchanged.
Interest rate rises can continue at a "measured pace," the Fed panel said.
"The stock market remained stuck in neutral today," said Alfred Goldman at AG Edwards.
"The reaction to a Federal Reserve rate increase was lukewarm. The Fed's decision to raise interest rates by a quarter point for the fourth time this year was no surprise. The Fed signaled it would stick to its policy of raising rates at a measured pace."
Ed Keon at Wachovia Securities said Wall Street was also concerned about the struggling dollar, which fell to a record low against the euro, because prolonged weakness could trigger inflation and other problems that might force the Fed to act on rates.
"The dollar has looked pretty horrible for the last month or so. If the dollar continues to weaken, then you would get worries about higher inflation and higher inflation expectations," he said.
"I think you have to at least admit that with the big (trade and budget) twin deficits there is a possibility, although not a high probability, of a downward spiral starting with the weaker dollar, and leading to more aggressive Fed action."
Markets had churned in a narrow range for most of the day after early economic news was generally positive:
The Labor Department reported jobless claims rose a less than expected 2,000 to 333,000 last week. The Commerce Department, meanwhile, reported that the US trade deficit shrank by 3.7 percent to 51.6 billion dollars in September, as exports increased 0.8 percent to a record 97.5 billion dollars.
European stock markets pushed as company news provided a fillip in otherwise cautious trading ahead of the Fed decision, which came too late for those markets.
London's FTSE 100 index gained 0.36 percent to finish at 4,734.5, Frankfurt's DAX rose 0.59 percent to 4,089.13, while in Paris the CAC 40 climbed 0.40 percent to 3,784.91.
In New York, the tech sector was under pressure after a disappointing revenue report from networking giant Cisco Systems, and broker downgrades on Dell and Hewlett-Packard.
Cisco tumbled 1.16 to 18.59, Dell shed 26 cents to 37.16 and HP lost 25 cents to 19.45.
Elsewhere, Microsoft dipped three cents to 29.74 amid reports it was preparing to launch a search engine to compete against Yahoo and Google.
Merck gained 70 cents to 26.70 despite a move by Standard and Poor's downgrading the pharmaceutical group's credit rating due to woes about its Vioxx arthritis treatment, withdrawn in September.
Bonds were weaker. The yield on the 10-year US Treasury bond rose to 4.254 percent from 4.218 percent Tuesday and that on the 30-year bond to 4.976 percent from 4.939 percent. Bond yields and prices move in opposite directions.
11/10/2004 - 22:22 GMT - AFP