US technology stocks fell on Wednesday after a disappointing forecast from Cisco Systems Inc, but blue chips hit a six-year high despite the Federal Reserve leaving the door open to further interest-rate hikes and an unexpected jump in crude oil prices.
A 4 percent rise in the shares of General Motors Corp carried the Dow to just 80 points below its all-time closing high, after the automaker announced progress in efforts to resolve labour issues at its former auto parts supply unit.
The Dow Jones industrial average was up 2.88 points, or 0.02 percent, to end at 11,642.65. The Standard & Poor's 500 Index was down 2.29 points, or 0.17 percent, at 1,322.85. The Nasdaq Composite Index was down 17.51 points, or 0.75 percent, at 2,320.74.
The Dow is holding at about 80 points from its highest-ever close of 11,722.98 on January 14, 2000. The US central bank, as expected, raised its benchmark lending rate by a quarter percentage point to 5 percent. But all eyes were focused on its accompanying statement, which said further rate increases might be needed to fight inflation.
"This doesn't necessarily mean there will be more increases, but it's a little more assertive in that direction," said Richard Dekaser, chief economist at National City Corp in Cleveland, Ohio.
Stocks were volatile after the Fed statement, but quickly turned lower as refinery snags reignited worries over summer oil supply and sent crude futures soaring. Crude for June delivery rose $1.44 to settle at $72.13 per barrel.
The Nasdaq was sharply lower throughout the day, hurt by declines in the technology sector as communications networking company Cisco, gave a disappointing revenue forecast. The Nasdaq was already reeling from a profit warning that computer maker Dell Inc gave earlier in the week.
"The earnings reports from Cisco and Dell were perceived to be just soft, and that's not where the market is from the standpoint of where investors are making money," said Richard Cripps, chief market strategist for Stifel, Nicolaus & Co.
"The Dow, simply has some more industrial companies and that seems to be the group that's leading the market." As widely expected, the Fed raised the benchmark federal funds rate to 5 percent from 4.75 percent, its 16th straight rate increase since June 2004. The Fed also increased the more symbolic discount rate to 6 percent from 5.75 percent. The discount rate is the interest rate that the Fed charges on short-term loans to banks from the discount window.
GM shares rose $1.04, or 4.1 percent, to $26.59 on the New York Stock Exchange and ranked among the biggest contributors to the Dow's advance.
On Nasdaq, Cisco shares fell 4.3 percent, or 93 cents, to $20.75. Dell was off 1.2 percent, or 31 cents, at $24.89. Trading was active on the New York Stock Exchange where declining shares beat advancers by about 6 to 5. About 1.61 billion shares were traded, matching the 1.61 billion daily average for last year.
On Nasdaq, decliners beat advancers by a ratio of about 8 to 5, with about 2.06 billion shares changing hands, above the 1.8 billion daily average last year.