Stocks Tumble after Fed Announcement

U.S. stocks closed lower for a second day Tuesday after the Federal Reserve left rates unchanged and declined to signal another round of quantitative easing. The Dow Jones Industrial Average fell 66.45 points, or 0.55%, to 11,954.94. The S&P 500 fell 10.74 points, or 0.87%, to 1,225.73. The Nasdaq Composite dropped 32.99 points, or 1.26%, to 2,579.27.

The Federal Reserve on Tuesday pointed to turmoil in Europe as a big risk to the economy, leaving the door open to a further easing of monetary policy even as it noted some improvement in the labor market. The Fed said it would continue its trade of $400 billion of short-term debt with long-term securities to extend the average maturity of its holdings, but did not unveil any new stimulus program.

Morgan Stanley (NYSE:MS) agreed to give up insurance claims against MBIA Inc (NYSE:MBI) in exchange for a $1.1 billion payment from the ailing insurer, ending a two-year legal fight over guarantees on mortgage bonds.

Crude-oil futures were back at $100 a barrel on Tuesday, settling at their best in nearly a week as concerns about potential for supply shocks around Iranian production kept prices afloat despite U.S. stocks trading off highs and a still-cautious statement from the U.S. Federal Reserve. Oil for January delivery added $2.37, or 2.4%, to settle at $100.14 a barrel on the New York Mercantile Exchange.

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