Stocks zigzagged on Wednesday following a Federal Reserve statement that pointed to more cheap money even as the Fed acknowledged the pace of economic recovery is faltering.

The S&P 500 and Nasdaq indexes were lower while the Dow was slightly higher in afternoon trading.

The Fed renewed its vow to hold benchmark interest rates exceptionally low for an extended period after a meeting of its policy-setting committee. The statement contained a cautionary note about volatile financial markets in light of Europe's recent debt problems.

The U.S. central bank said the recovery was proceeding, a downgrade from its assessment in April when it said the economy had continued to strengthen.

It is unlikely, with monetary policy the way it is, that we're going to go into double dip recession, said Hank Smith, chief investment officer at Haverford Trust Co. in Philadelphia.

The statement does a good job of subtly acknowledging the softness compared to two months ago, without being alarmist.

The Dow Jones industrial average <.DJI> gained 21.32 points, or 0.21 percent, to 10,314.84. The Standard & Poor's 500 Index <.SPX> fell 2.38 points, or 0.22 percent, to 1,092.93. The Nasdaq Composite Index <.IXIC> dropped 5.36 points, or 0.24 percent, to 2,256.44.

Homebuilder shares rose despite data that showed new home sales dropped to a record low in May.

Initially the shares fell. The S&P home builders ETF fell to its lowest in more than four months after the data, but was last up 2 percent at $15.53.

(Editing by Kenneth Barry)