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Stocks waver a day after record-setting run

Ken Sweet, AP Markets Writer

In this Wednesday, Sept. 18, 2013, photo, specialist Christopher Culhane works at his post on the floor of the New York Stock Exchange after the Federal Reserve announcement. Global stock markets surged Thursday after the U.S. Federal Reserve unexpectedly refrained from reducing its massive economic stimulus. (AP Photo/Richard Drew)

NEW YORK (AP) -- Stocks were mostly lower Thursday, a day after hitting a record high because of a surprise move from the Federal Reserve to keep its economic stimulus in place.

The Standard & Poor's 500 index was down two points, or 0.1 percent, to 1,724. The Dow Jones industrial average slipped 34 points, or 0.2 percent, to 15,642 and the Nasdaq composite index was up less than a point to 3784.

The Fed voted Wednesday to continue its $85 billion-a-month bond-buying program. The decision was a surprise to most investors because Fed Chairman Ben Bernanke and other voting members of the Fed had telegraphed over the summer than the bank was considering pulling back. The bond buying is designed to keep interest rates low with the goal of stimulating the economy by encouraging borrowing and lending.

Stocks soared on the news. Both the Dow and the S&P 500 hit record highs Wednesday. Investors also made big moves into gold, anticipating that the Fed's decision to pull back, also called "tapering" on Wall Street, may weaken the dollar or cause inflation.

"He basically shelved tapering for the short and medium term," said Frank Davis, director of sales and trading at LEK Securities. Davis said the Fed would likely not vote to start pulling back until its mid-December policy meeting.

Investors are now trying to figure out if the Fed's decision to do nothing is a sign that the economy is in worse shape than previously thought.

In its policy announcement Wednesday, the Fed also cut its economic growth forecasts for this year and 2014. Bernanke warned in his comments that the upcoming debt ceiling and budget battles between the White House and Congress "may involve additional risks to financial markets and to the broader economy."

"There is still some uncertainty in the marketplace whether the Fed's decision not to pull back was driven by politics or if there are true economic concerns," said Julius Ridgeway, an investment adviser at Medley Brown, a financial-advisory firm in Jackson, Miss.

Ridgeway said the market's celebration Wednesday of more stimulus highlights a broader concern: Investors continue have lingering doubts that this economic recovery is sustainable.

"If there was faith that the economy could prosper in the absence of stimulus, no one would be worried about the Fed taking away the punch bowl," he said.

One possible sign of economic worries can be seen in gold. The metal continued to climb Thursday, surging $64 an ounce, or 4.9 percent, to $1,366 an ounce. It is on track for its biggest one-day gain since the financial crisis.

The yield on the 10-year Treasury note rose to 2.73 percent from 2.69 percent late Wednesday.

Investors also had a better-than-expected report on unemployment claims to digest Thursday. The government said the number of people who filed for unemployment benefits rose to 309,000 last week, well below the 326,000 claims economists had expected, according to data from FactSet.

In corporate news:

— ConAgra, whose many brands include Chef Boyardee and Marie Callender's, slumped $1.32, or 4 percent, to $30.76 after the company's income fell short of analysts' expectations. The company also cut its outlook for 2014.

—JPMorgan Chase agreed to pay $920 million in fines to U.S. and British regulators related to the "London Whale" trading loss. The stock fell 49 cents, or 1 percent, to $52.92.

— Rite Aid jumped 58 cents, or 16 percent, to $4.29. The drug store chain said it had an unexpected second-quarter profit. It also raised its profit forecast for fiscal year 2014.

— Agilent Technologies, which makes scientific instruments, rose $2.21, or 4.5 percent, to $51.50 after announcing a spinoff of its electronic measurement business.