US stocks were mixed Wednesday as all three indexes slumped late in the session after the Federal Reserve's decision to expand Operation Twist was poorly received by investors, who had hoped for a third round of quantitative easing, or QE3. Operation Twist, in which the Treasury swaps short-term notes on its balance sheet for longer-term bonds, was scheduled to expire June 30th, but will now continue through the end of the year. Investors had been hoping for a third round of Treasury purchases designed to stimulate borrowing by lowering interest rates.
The Dow Jones industrial average fell 13 points, or 0.1 percent, to close at 12,824. The blue-chip index had gained as much as 160 points earlier in the session, but investors began selling when the Fed's decision failed to impress. Despite the decline, the Dow had more winners than losers, at 16 to 14, led by a 3 percent surge in shares of JP Morgan Chase, which surged just over 3 percent after a report that the bank had sold most of its position that led to a catastrophic loss of at least $2 billion. The worst performer on the index was Procter & Gamble, which slumped nearly 3 percent on lower guidance.
The Standard & Poor's 500, meanwhile, dropped 2.3 points, or 0.17 percent, to finish at 1,366; and the tech heavy Nasdaq composite gained 0.7 points, or 0.02%, to settle at 2,930.5. The Nasdaq got a huge boost from shares of Affirmative Insurance Holdings, which soared more than 190 percent, and was one of 24 Nasdaq stocks enjoying double-digit gains on the day. The S&P's top performer was Jabil Circuit Inc, which gained 6.85 percent on a strong earnings report and renewed optimism about its long-term growth prospects.