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8A – Daily News – Wednesday, August 11, 2010 NEW YORK (AP) — The stock market had a half-hearted comeback Tuesday after the Federal Reserve announced it would take small steps to stimulate the economy. The Dow Jones industri- al average, down about 100 points before the Fed announced its plans, recov- ered to a loss of 54. The other major market indexes also bounced off of their lows. But investors were still cautious: The Dow was able to briefly show a gain, but fell back again as traders recognized that the Fed’s moves, while welcome, would be small and won’t cure the economy’s prob- lems. Losing stocks were ahead of advancers on the New York Stock Exchange by almost 3 to 1. And stocks considered safe bets in a weak economy, including health care and consumer products companies, were among the gainers. Stocks cut losses on Fed’s economic stimulus plans Wall Street on mortgages and other consumer loans. Analysts said that while The Fed, in a statement issued after a one-day poli- cy meeting, said it will use money from its investments in mortgage securities to buy government debt on a small scale. Because rates on bonds and other debt fall as their prices rise, the Fed’s purchases should help send long term rates on mort- gages and corporate debt slightly lower. And the Fed hopes, stimulate lending to consumers and businesses. News that the Fed would be buying government debt, and in the process reduce the supply of Treasury issues on the market, sent Treasurys higher. The yield on the government’s 10- year note, which moves in the opposite direction from its price, fell to 2.75 percent from 2.82 percent before the announcement. The yield is used to help set rates investors were hoping the Fed would take some steps to help the economy, the market recognizes the limi- tations of the central bank’s plans. ‘‘We had an hour or so of rally, but then it backed off a bit,’’ said Dan Cook, Chica- go-based senior market ana- lyst with brokerage firm IG Markets. ‘‘Traders realized it’s not a game changer. It’s not going to pump up the market.’’ The purchases of debt the Fed plans are known as ‘‘quantitative easing.’’ Tehama County business operators: When folks search for what you’re selling, do they find your business? Online business directories are the fastest-growing vehicle for consumer business searches, increasing 23% between 2007 and 2009. During the same period, use of printed Yellow Pages books for consumer business searches decreased by 15%. 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(530) 527-2151 D NEWSAILY RED BLUFF TEHAMACOUNTY advertise@redbluffdailynews.com Among host sites for local online search directories, only www.redbluffdailynews.com Economists estimate that the Fed will have about $10 billion a month to buy the debt. That is a small amount of money compared to the economy’s needs. The Fed said it would use the proceeds it earns on mortgage bonds to buy two- year and 10-year Treasurys, and that it would buy an equal amount of govern- ment debt as existing bonds mature. The net effect is to keep its $2.3 trillion balance sheet steady, while shifting its holdings into more gov- ernment debt. The Fed had hoped to roll back its debt holdings as the economy improved. In 2009 and early 2010, the Fed bought $1.25 tril- lion in mortgage securities, Mark's Fitness -Private Personal Training -Public Fitness Classes (Spin & other classes TBD) Opening Sept. 1st WANTED: Fitness Instructors Call: (530) 941-2832 821 Walnut St. Recently expanded and moved near Bidwell Elementary License # 525405817 (530) My qualifications include: B.A. in Elementary Education and experience teaching grades K-8. Accepting state pay programs & cash pay, etc. 209-8743 at 2,277.17. NYSE consolidated vol- ume, which includes shares traded on other exchanges, came to a light 4 billion shares, up from 3.3 billion Monday. Volume has been light all summer because investors don’t feel secure about the economy or the market. And the Fed’s move didn’t change their view. Stock and bond investors $175 billion in mortgage debt from Fannie Mae and Freddie Mac, and $300 bil- lion in government debt. In March, the Fed stopped buying new mortgage secu- rities and Fannie and Fred- die debt because the econo- my was clearly recovering. Some analysts said the Fed is moving slowly in its current stimulus plans so investors don’t get the sense that the economy is more troubled than they have thought. ‘‘There is only so much the Fed can do and right now it wanted to take baby steps in trying to provide additional liquidity without roiling the markets and scaring investors,’’ Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn. And some analysts are skeptical. Cook of IG Mar- kets said that even if the Fed ●●●●●●●●●●●●●●●●●●● starts adding to its holdings of government debt, that would do little to boost the recovery. He noted that the Fed’s purchases last year pushed interest rates lower and fed the stock market’s big rally. But it didn’t lead to more loans for small businesses, a big source of new jobs. ‘‘They can continue to buy Treasurys to keep bor- rowing costs down. But if the people who need credit don’t get it, it’s like knock- ing $50,000 off a Lam- borghini. You’re still not going to be able to afford it,’’ Cook said. The Dow closed down 54.50, or 0.5 percent, at 10,644.25 after the Fed’s mid-afternoon statement. The Standard & Poor’s 500 index fell 6.73, or 0.6 per- cent, to 1,121.06. The Nas- daq composite index closed down 28.52, or 1.2 percent, Barber Shop $ Cheers 600 Open 6 days 570-2304 259 S. Main St. Tractor Supply Center Senior Cuts looked past the Fed’s assessment of the economy that was included in the statement although it was bleaker than the central bank’s view in June. The Fed said, ‘‘the pace of eco- nomic recovery is likely to be more modest in the near term than had been antici- pated.’’ The dollar, which is hurt by a weak economy, fell after the Fed statement was released. The Fed indicated that interest rates will remain at extremely low levels for an extended peri- od. And currencies tend to fall on low rates. Overseas, Hong Kong’s Hang Seng index fell 1.5 percent, while Japan’s Nikkei stock average fell 0.2 percent. Britain’s FTSE 100 fell 0.6 percent, Ger- many’s DAX index dropped 1 percent, and France’s CAC-40 fell 1.2 percent. All the markets were closed before the Fed announcement. Jack the Ribber Come by for the Best Lunch in town • Ribs •Tri-Tip • Pulled Pork • Specials Tues.-Sat. 6am-8pm Sun. 10am-3pm Closed Monday 1150 Monroe St. 527-6108