NEW YORK (AP) — The stock market paused Thursday as investors tried to figure out what to do next following the Federal Reserve's decision to hold steady on its stimulus for the economy.
The Dow Jones industrial average and Standard & Poor's 500 index pulled back from their record highs the day before. Gold, historically a haven for nervous investors, had its biggest one-day jump since the onset of the financial crisis in September 2008.
Many investors had expected the central bank scale back its $85 billion in monthly bond purchases, but the Fed said it first needed to see more evidence that the economy was improving.
The question now is whether stocks can continue their strong run-up given the Fed's dimmer outlook on the economy. The stock market is up 21 percent for the year, and 155 percent since a recession low in March 2009. And, after a tough August, the S&P 500 has risen 11 of the last 13 days.
Wednesday's rally extended that surge, but raised a deeper concern for Julius Ridgeway, an investment adviser at Medley Brown, a financial-advisory firm in Jackson, Miss.
Ridgeway said the rally showed that investors believe the economy still needs Fed's help, even after more than two years of modest economic growth.
"The market wants the economy to be healthy and on life support, and it can't have both over the long term," he said.
The Fed's bond buying is designed to keep interest rates low, with the goal of stimulating the economy by encouraging borrowing and lending.
Chairman Ben Bernanke and other voting members of the Fed telegraphed throughout the summer that the central bank was considering pulling back on the program, if the economy was healthy enough.
Now, with the Fed delaying its pullback, the market could enter a new period of uncertainty, rarely good for sustaining a stock rally.