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Stocks mostly higher after Fed assessment

The Federal Reserve didn't surprise investors but still left them disappointed.

Stocks ended mixed but mostly higher after the Fed said the economy was on the mend. However, bond prices fell after the Fed said it wouldn't step up its spending to purchase Treasurys and other debt to pry interest rates lower.

The central bank's decision Wednesday to leave its key lending rate at a low of zero to 0.25 percent wasn't a surprise but some investors have been hoping the central bank would do more to revive the economy. Others wanted it to more clearly lay out how it will keep inflation in check.

"The Fed is still stuck on that tightrope of trying to make sure they provide enough reassurance to keep the recovery going but at the same time try to allay the concern that they won't allow inflation to get going either," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

In the economic assessment statement accompany its rate decision, the Fed said the economy's rate of decline appears to be slowing. It noted that consumer spending has shown further signs of stabilizing although job losses, shrinking wealth and tight credit remain problems. And while the Fed said economic activity is likely to remain weak for some time, it repeated its belief that stimulus policies will restore the economy to growth.

Policymakers noted that energy and other commodities prices have risen, although they said "substantial resource slack" would likely rein in cost pressures and that inflation "will remain subdued for some time."

The Fed also didn't say it would increase its purchases of Treasurys or other kinds of government debt, disappointing some investors who had hoped for more. The Fed has said it would buy $1.25 trillion in mortgage-backed securities and $300 billion in Treasurys in an effort to stimulate the economy by keeping borrowing rates low.

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