Dow closes at record high as Fed continues cutting stimulus

NEW YORK -- The Dow Jones industrial average closed at an all-time high Wednesday as the good narrowly outweighed the bad for the stock market.

After investors took in some solid U.S. company earnings, the latest move from the Federal Reserve and a report of unexpectedly weak economic growth in the first quarter, the stock market managed its third straight day of gains.

The Dow Jones industrial average rose 45.47 points, or 0.3 percent, to 16,580.84, four points above its previous record set Dec. 31. It was the first day the index closed in positive territory for the year.

The Standard & Poor's 500 index rose 5.62 points, or 0.3 percent, to 1,883.95. The Nasdaq composite rose 11.01 points, or 0.3 percent, to 4,114.56.

Stocks started the day lower after the Commerce Department said U.S. growth slowed to a barely discernible 0.1 percent annual rate in the January-March quarter, less than 1.1 percent forecast by economists, according to FactSet. Winter storms chilled activity.

The market's reaction was muted because most investors expect the slowdown to be temporary and growth to rebound with higher temperatures.

"Most people, including us, expected March to have been the strongest month of the first quarter" and that growth will continue to pick up, said Sean Lynch, global investment strategist for Wells Fargo Private Bank. "That's an OK environment for the market."

Some solid earnings reports and corporate deal news helped offset the weak economic report, and by midday stocks had eked out small gains.

Stocks climbed higher in afternoon trading after the Federal Reserve's statement following its April policy meeting was in line with investor's expectations.

The Fed said it would reduce its monthly bond purchases by another $10 billion to $45 billion. The stimulus is intended to hold down long-term interest rates and support the mortgage market. The Fed also reaffirmed its plan to keep short-term interest rates low to support the economy "for a considerable time" after its bond purchases end, likely late this year.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.65 percent from 2.70 percent on Tuesday. The yield on the note has fallen from 3 percent at the start of the year.

As bond yields remain close to historical lows, stocks will likely remain attractive to investors, said David Kelly, Chief Global Strategist at JPMorgan funds.

"What else are you supposed to do with your money?" Kelly said. "For lack of something better to do with it, money is going to move back into equities."

Among other stocks making big moves:

-- Twitter fell $3.65, or 8.6 percent, to $38.97 after its customer growth disappointed investors when it reported quarterly results late Tuesday. Twitter had 255 million monthly users at the end of March, up 25 percent from a year earlier, but 2 million fewer than industry analysts had expected. Twitter shot higher after its IPO at $26 a share in November, climbing as high as $73.31 in December. The stock has been steadily declining since then.