Wall St edges lower as Fed keeps stimulus in place

By Angela Moon

NEW YORK (Reuters) - U.S. stocks edged lower on Wednesday after the Federal Reserve left in place its bond-buying stimulus plan, saying economic growth had stalled but indicating the pullback was likely temporary.

Describing the U.S. job market as continuing its modest pace of improvement, the Fed repeated a pledge to keep purchasing securities until employment improves substantially.

The statement from the Fed follows data that showed the economy, as measured by gross domestic product, unexpectedly contracted in the fourth quarter. Economists stressed that the 0.1 percent contraction, caused partly by a plunge in government spending and lower business inventories, is not an indicator of recession.

"It is interesting that the Fed decided to focus on the GDP report, pointing to how activity slowed because of transitory factors. That sums up the GDP report. I am a bit puzzled why the Fed focused solely on one report. I would argue that this was a slightly dovish report," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.

The Dow Jones industrial average <.DJI> was down 13.32 points, or 0.10 percent, at 13,941.10. The Standard & Poor's 500 Index <.SPX> was down 1.90 points, or 0.13 percent, at 1,505.94. The Nasdaq Composite Index <.IXIC> was down 2.11 points, or 0.07 percent, at 3,151.55.

The S&P 500 held above 1,500, seen by technical analysts as an inflection point that will determine the overall direction in the near term. The index is on track to post its best month since October 2011 and its best January since 1997.

"This is a very modest pullback after a steep run," said Paul Zemsky, head of asset allocation at ING Investment Management in New York.

"It is too soon for the Fed to start talking about the end of (their bond buying program); the economy needs stimulus to sustain this recovery."

Both Boeing Co and

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