YAHOO [BRIEFING.COM]: A positive response to the latest FOMC policy statement brought a bid to the broader market, but stocks still finished with varied losses.

Weakness was widespread in the early going. Participants took their cues from overseas markets, which moved lower in response to disappointing trade data from China overnight. The morning mood was further undermined by news that second quarter nonfarm productivity made a surprise 0.9% decline. News that wholesale inventories had a weaker-than-expected 0.1% increase had no real impact on action.

Uncertainty ahead of the latest FOMC policy statement also prompted participants to pare their positions, but once the announcement hit newswires buyers stepped into the fold.

The FOMC voted to keep the target federal funds rate at 0.00% to 0.25%, as expected. It also repeated recent statements by noting that conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

However, the Fed surprised many with its plans to keep constant its securities holdings by reinvesting principal payments from agency debt and agency mortgage-backed securities in Treasuries. That pronouncement drove the benchmark 10-year Note sharply higher, such that its yield dropped to a 14-month low of less than 2.75%.

Given that the Fed will hold its balance sheet constant, the decision to purchase Treasuries is not a means of quantitative easing, but it will likely keep the market thinking the Fed is moving closer to implementing new quantitative easing measures as it looks to support economic growth and price stability.

The dollar was dropped in response to the announcement. It had been up almost 1% at its session high, but finished with just a 0.2% gain.

The market's mood may have improved in the wake of the FOMC statement, but the S&P 500 and Dow both failed to find positive ground. Instead, they chopped into the close to finish with varied losses after each was down more than 1%.

Though the broader market was mired in the red, defensive-oriented stocks were able to muster gains. As such, telecom (+0.4%), utilities (+0.4%), consumer staples (+0.3%), and health care (+0.2%) were the only sectors to settle higher.

Commodities were generally weak this session. As such, the CRB Commodity Index gave up 0.8%.

Oil prices saw some of the harshest selling in pit trade. The commodity gave up 1.5% to settle at $80.25 per barrel. As a reminder, weekly inventory figures are due tomorrow.

Natural gas prices finished fractionally lower at $4.30 per MMBtu.

As for precious metals, gold prices slipped 0.2% to settle at $1200 per ounce, but silver shed 0.5% to close pit trade at $18.16 per ounce. Both metals have since moved higher in electronic trade, however; they are up 0.4% to $1205 per ounce and up 0.5% to $18.33 per ounce, respectively.

Trading volume remained unimpressive in that fewer than 1 billion shares were exchanged on the NYSE this session. That makes for a lackluster follow up to the prior session's paltry count, which came in at its lowest level of the year.

Advancing Sectors: Telecom (+0.4%), Utilities (+0.4%), Consumer Staples (+0.3%), and Health Care (+0.2%)
Declining Sectors: Tech (-1.2%), Materials (-1.0%), Financials (-1.0%), Industrials (-0.8%), Consumer Discretionary (-0.8%), Energy (-0.8%)DJ30 -54.50 NASDAQ -28.52 NQ100 -0.8% R2K -2.0% SP400 -1.3% SP500 -6.73 NASDAQ Adv/Vol/Dec 556/2.05 bln/2088 NYSE Adv/Vol/Dec 814/980 mln/2218