Fed Inaction Disappoints Investors

Stocks failed to sustain an advance Tuesday and finished mostly lower following news that Federal Reserve policy-makers had decided to keep interest rates at current levels.

Although the outcome of the Federal Open Market Committee meeting was widely anticipated, the financial markets apparently had held out hope for a pleasant surprise in the form of a rate cut.

“You can characterize the session as a day of modest anticipation and modest disappointment surrounding the Fed’s meeting,” said Charles G. Crane, senior vice president and director of research at Spears, Benzak, Salomon & Farrell Inc. “The reality of that non-action kindled a little disappointment and profit-taking among investors.”

Blue chips and the broader market started the session by moving decisively higher but reversed course in the afternoon as bonds temporarily weakened. The Dow Jones industrial average ended with a modest loss of 4.33 at 4,765.60.

Losers nosed past gainers by about 11 to 10 on the New York Stock Exchange where volume expanded to 362.55 million shares as of 4 p.m. On Monday, a more moderate 273.11 million shares changed hands on the Big Board’s floor.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

BellSouth, up 1-1/4 to 72-7/8.

The communications company boosted its quarterly cash dividend by 4 percent to 72 cents a share and declared a 2-for-1 stock split.

Micron Technology, down 3-1/4 to 78-3/4.

Concerns about quarterly earnings bedeviled certain technology issues. Among other active NYSE stocks,

Advanced Micro Devices fell 1-3/8 to 29-3/4.

Glaxo Wellcome, up 1/2 to 23-7/8.

The stock attracted attention amid reports that a Glaxo Wellcome drug to treat HIV was involved in a promising trial.

NASDAQ

Norand, down 17-3/8 to 17-1/4.

Investors dumped the stock after the maker of mobile computing systems and wireless data communication networks reported a fourth-quarter loss of 87 cents a share, compared with a profit of 64 cents a share a year earlier.

AMEX

Echo Bay Mines, unchanged at 10-3/4.

The company said it boosted its minority interest in Santa Elina Gold to 6.7 percent as part of a strategic alliance to explore for gold in Brazil.