Stocks mixed, bonds fall after Fed meeting

By Steven C. Johnson

NEW YORK (Reuters) - The Dow industrials slumped for a fourth straight day on Wednesday and U.S. government bonds also fell after the Federal Reserve revived concern about the economy and did not extend programs to buy Treasury or mortgage debt.

The dollar rose broadly, with the euro falling after the European Central Bank lent banks nearly half a trillion euros in its first one-year tender. Traders also said the Swiss National Bank intervened in the currency market to weaken the Swiss franc against the U.S. currency.

Wall Street pared its gains after the Fed said the U.S. economy would remain weak for some time, though some investors took heart from surprisingly strong data earlier on orders for U.S. durable goods, such as appliances and computers, in May.

"The Fed is a little more downbeat than the market has been. That they're emphasizing the weakness is a touch disappointing to me and to the markets," said Jim Awad, managing director at Zephyr Management in New York.

Bonds reacted more negatively to the Fed's decision not to add to its asset purchase program, launched in March to keep long-term interest rates from rising too high and threatening a fragile U.S. economy.

The Dow Jones industrial average .DJI fell 23.05 points, or 0.28 percent, at 8,299.86. Other indexes fared a bit better but were well off the day's highs. The Standard & Poor's 500 Index .SPX ended up 5.84 points, or 0.65 percent, at 900.94 while the Nasdaq Composite Index .IXIC rose 27.42 points, or 1.55 percent, at 1,792.34.

On the bond market, the benchmark 10-year U.S. Treasury note was down 18/32 in price, with the yield just below 3.70 percent, while the 2-year U.S. Treasury note was up 8/32, with the yield near 1.22 percent.

ECB TENDER, SWISS INTERVENE