Stocks seesawed in volatile trading on Tuesday after the Federal Reserve said the economic recovery will remain slow, while pledging to keep interest rates near zero for two more years.
Trading was choppy as investors struggled with the Fed's conflicting signals.
The Federal Reserve rate signals an extended period of diminished, if not negative, economic growth for quite some time, said John Kilduff, partner in Again Capital LLC in New York.
This bodes poorly for demand, but may indicate additional easing measures, which we know from recent experience is supportive of asset prices.
With about an hour of trading left in the session, the Dow Jones industrial average dipped 13.02 points, or 0.12 percent, to 10,796.83. But the Standard & Poor's 500 Index gained 4.94 points, or 0.44 percent, to 1,124.40. The Nasdaq Composite Index rose 24.12 points, or 1.02 percent, to 2,381.81.
According to a Reuters poll, the United States faces one-in-four odds of slipping back into recession, though the economic outlook was seen as raising the likelihood of new Fed action.
The benchmark S&P 500 dropped nearly 17 percent over the past two weeks on wrangling in Washington over the debt ceiling, as well as on soft economic data and a ballooning debt crisis in Europe.
Equities suffered a massive drop on Monday, the first session since the United States lost it top-tier triple-A credit rating from Standard & Poor's. As a result of Monday's huge sell-off, the S&P 500 posted its worst one-day percentage loss since December 2008 and got close to entering bear market territory.
(Reporting by Rodrigo Campos; Additional reporting by Robert Gibbons; Editing by Jan Paschal)