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Tickers in this Article: MSFT, ORCL, DELL, NVDA, TXN, INTC
The Federal Reserve Open Market Committee's two-day summit failed to announce anything new to boost the economy but for the extension of Operation Twist. This was definitely not enough to lift investor sentiment as benchmarks ended almost unchanged. Indices hovered within a tight range through the morning, but with the commencement of Fed Chairman Ben Bernanke's news conference in the afternoon benchmarks slipped lower. However, positive developments in Europe HELPED markets ended close to where they had started. The Dow Jones Industrial Average (DJI) slipped 0.1% to end at 12,824.39. The Standard & Poor 500 (S&P 500) dropped 0.2% to finish yesterday's trading session largely changed at 1,355.69. The tech-laden Nasdaq Composite Index edged up marginally, by 0.02% to close just 0.69 points higher at 2,930.45. The fear-gauge CBOE Volatility Index (VIX) slumped 6.2% and settled at 17.24. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and the Nasdaq were 6.57 billion shares, lower than last year's daily average of 7.84 billion. Advancing and declining stocks ran neck to neck on the NYSE; 49% advanced while 48% moved lower.

Investors were waiting expectantly for the outcome of the Federal Reserve Open Market Committee's two-day meet, and onlookers had already anticipated an extension of 'Operation Twist'. This is an ongoing plan that swaps the short-term debt in its portfolio with long-term Treasury bonds and is aimed at cutting down borrowing costs. The current program is due to end on June 30. In a recent meeting, the Fed had decided to extend Operation Twist till the end of 2012. Thus, when the central bank made a announcement that was all too predictable, investors found to reason to cheer.

Clearly, investors had been hoping for more and were looking forward to a third round of bond purchases. Over the past couple of weeks, investor hopes for fresh monetary stimulus was buoyed after Chicago Federal Reserve Bank President Charles Evans and the Atlanta and San Francisco Fed presidents talked about injecting more liquidity into the system.

However, the central bank dashed all such hopes and markets dropped into the red since Bernanke did not mention a third round of quantitative easing during his news conference. Nonetheless, Bernanke did not completely negate chances of such a measure in the future, but that depends on worsening labor market conditions. Bernanke said: "We still do have considerable scope to do more and we are prepared to do more&If we're not seeing sustained improvement in the labor market that would require additional action".

Alongside, the FOMC statement noted: "To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014".

While domestic developments failed to impress the investors, things looked better on the other side of the Atlantic. After prolonged political uncertainty in Greece that hugely dampened benchmarks throughout May, the nation was finally able to get a clear picture on who is forming the government. After the weekend election, where conservative New Democracy party managed a narrow victory, the party has joined hands with the Democratic Left party and the Socialist Pasok party to form a coalition government.

Meanwhile, German Chancellor Angela Merkel spoke of the possibility of employing European security funds to buy bonds. Merkel said: "There are no concrete plans that I know of but there is the possibility in the EFSF and the ESM to buy bonds on the secondary market, bound up of course always with conditions". She further added: "But that is a purely theoretical comment about the contractual situation".

Coming back to the home front, the Nasdaq outperformed fellow benchmarks for the third-consecutive day. It was the lone benchmark to finish in the green yesterday, even though it managed only marginal gains. A decent performance from the technology sector that helped Nasdaq avoid the red zone and the Technology Select Sector SPDR (XLK) was up 0.2%. Among tech stocks, Microsoft Corporation (NASDAQ:MSFT), Oracle Corporation (NASDAQ:ORCL), Dell Inc. (NASDAQ:DELL), NVIDIA Corporation (NASDAQ:NVDA), Texas Instruments Incorporated (NASDAQ:TXN) and Intel Corporation (NASDAQ:INTC) jumped 0.8%, 1.9%, 1.0%, 1.6%, 1.0% and 0.5%, respectively.

 
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