Stocks cut losses on Tuesday after the Federal Reserve announced measures designed to boost the sluggish economic recovery.

The Dow, which had been about 100 points lower before the Fed's announcement, was down about 28 points at midafternoon.

The U.S. central bank said it would begin funneling proceeds from its maturing mortgage bonds into longer-term government debt in an effort to support the sputtering recovery. It also renewed its pledge to keep interest rates low for an extended period, as had been expected.

The moves suggest that even the more hawkish members of the Fed understand the severity of the issue and are willing to train their guns on the problem if it does get worse, said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

The Dow Jones industrial average <.DJI> was down 28.91 points, or 0.27 percent, at 10,669.84. The Standard & Poor's 500 Index <.SPX> was down 4.24 points, or 0.38 percent, at 1,123.55. The Nasdaq Composite Index <.IXIC> was down 24.04 points, or 1.04 percent, at 2,281.65.

The S&P rebounded back above its 200-day moving average. All three major indexes had been down more than 1 percent before the Fed's decision and on evidence that China's rapid growth was easing.

Intel Corp pressured the Nasdaq, falling 3.4 percent to $19.94 after the chipmaker was hit with brokerage downgrades, with analysts citing the expectation for a subdued third quarter.

(Additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)