NEW YORK (AP) — Stocks made a partial comeback after the Federal Reserve said it would take small steps to stimulate the economy.

The Dow Jones industrial average, down about 100 points before the Fed announced its plans, recovered about half that loss. But investors were still cautious. Losing stocks were ahead of advancers on the New York Stock Exchange by almost 3 to 1.

The Fed said after its policy meeting that it will use money from its investments in mortgage securities to buy government debt. Investors saw the moves as a sign that the Fed is willing to step in, but that it doesn’t view the economy as needing more dramatic action right now.

The Dow fell 54, or 0.5 percent,to 10,644. The Standard & Poor’s 500 index fell 6, or 0.6 percent, to 1,121. The Nasdaq composite index was down 28, or 1.2 percent, at 2,277.

Volume on the NYSE came to a light 980 million shares.

(Copyright 2010 by The Associated Press.  All Rights Reserved.)

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