U.S. Stocks End Lower As Fed Downgrades View On Economy, Holds Back Furt

4:11 PM, Aug 1, 2012 -- U.S. stock indexes closed lower, waffling in the wake of the Fed's move to keep monetary policy on hold. The Federal Reserve downgraded its view on the economy without announcing any further stimulus plans. Now, all eyes are on Europe, where a meeting between the Governing Council of the European Central Bank will take place on Thursday, in Frankfurt.

In its statement, The Federal Open Market Committee said, "economic activity decelerated somewhat over the first half of the year," vs. its prior stance that the "economy has been expanding moderately."

As expected, the Fed did not announce another round of quantitative easing. Analysts were somewhat surprised that the low-rate pledge was not extended beyond the current "late 2014" promise. Even though no plans for an immediate third round of quantitative easing were made, the door was left open. The FOMC promised to "closely monitor incoming information on economic and financial developments" and said it "will provide additional accommodation as needed."

Stocks got an early lift this morning when ADP released its non-farm payrolls estimate. ADP projects non-farm payrolls in July will be up 163,000. The official U.S. payroll data report will be released this Friday.

Other data released today showed manufacturing activity in the United States is softening. The ISM manufacturing index came it at 49.8, above last month's 49.7 and below the consensus estimate of 50.1.

In trading news, many stocks were erroneously impacted today due to a technology error at market maker Knight Capital (KCG). Heavy computer-based trading erupted at the open, prompting the NYSE to review trades in 140 different issues after the issue caused a trading halt in a handful of New York Stock Exchange-listed stocks. The exact cause of this issue is still being investigated.

Commodities posted a mixed session. Gold for August delivery fell 0.4%, to $1,603.70 an ounce on the New York Mercantile Exchange. Oil got a boost from a larger-than-expected supply decrease. Oil for September delivery advanced 1%, to end at $88.91 a barrel on the New York Mercantile Exchange.

Here's where the markets stood at end-of-day:

US MARKETS

Dow Jones Industrial Index down 32.55 (-0.25%0 to 12,976.13

S&P 500 down 4.00 (-0.29%) to 1,375.32

Nasdaq Composite down 19.31 (-0.66%) to 2,920.21

GLOBAL SENTIMENT

FTSE 100 up 71.56 (+1.3%) to 5,706.94

DAX down 17.87 (-0.3%) to 6,754.45

CAC 40 up 29.76 (+0.9%) to 3,321.78

Nikkei 225 down 53.21 (-0.6%) to 8,641.85

Hang Seng Index up 23.57 (+0.1%) to 19,820.38

Shanghai China Composite Index up 19.73 (+0.9%) to 2,123.36

UPSIDE MOVERS

(+) CDZI, Water Project Gets Environmental Impact Nod

(+) SIMG, Posts Better-Than-Expected Results

DOWNSIDE MOVERS

(-) LQDT, Q2 Estimates Above Expectations

(-) IDIX, Announces Public Offering

(-) KCG, Trading Glitch