Fed's forecast helps markets trim losses

NEW YORK - A mixed economic forecast from the Federal Reserve helped the stock market pare steep losses that followed uninspiring reports on consumer sentiment and housing.

Stocks slipped from 13-month highs in light trading yesterday as gains in health-care companies helped offset drops in financial and industrial stocks. The Dow Jones industrial average fell 17 points a day after jumping by 133.

The market strengthened in afternoon trading as the Federal Reserve released minutes from its latest meeting, during which it pledged to keep rates low for the foreseeable future and said inflation for now remained at bay. The Fed slightly raised its expectations for economic growth during the second half of this year and for next year but said unemployment would remain high.

That followed the Conference Board's report that its Consumer Confidence Index rose to 49.5 in November from a revised reading of 48.7 in October. While better than expected, the report shows that consumers remain gloomy heading into the holiday season. A reading above 80 means the economy is on solid footing.

A report of the fourth straight month of improving house prices in September did little to shore up confidence. The Standard & Poor's/Case-Shiller home price index rose 0.3 percent in September from the previous month.

The government also revised its calculation of third-quarter economic growth down to 2.8 percent from its original estimate of 3.5 percent, the latest sign that the recovery is likely to be slow and bumpy.

"Today, as far as the economic data goes, I think we have a bit of a hung jury," said Howard Ward, chief investment officer of the GAMCO Growth Fund.

Ward said a warning from China's central bank that commercial banks there should control their lending also weighed on the market, particularly financial stocks. The comments raised concerns that the Chinese government could take steps to keep growth in check.

The Dow ended down 17.24, or 0.2 percent, yesterday to 10,433.71 after falling as much as 91 points. The Standard & Poor's 500 index fell 0.59, or 0.1 percent, to 1,105.65, while the Nasdaq composite index fell 6.83, or 0.3 percent, to 2,169.18.

Among health-care stocks, Medtronic Inc. jumped more than 7 percent after the medical-device maker reported a surprising 59 percent increase in its quarterly profit and raised its full-year forecast. It gained $2.94 to $43.25.

Analysts expect trading to be choppy this week amid light trading volume heading into Thanksgiving.

The Russell 2000 index of smaller companies fell 2.23, or 0.4 percent, to 592.58.

China's Shanghai index fell 3.5 percent, its biggest decline in three months, after the warning from that country's central bank. Japan's Nikkei stock average fell 1 percent. Britain's FTSE 100 fell 0.6 percent, Germany's DAX index fell 0.6 percent, and France's CAC-40 lost 0.8 percent.