Fed standstill on stimulus pulls stock indexes lower

A late afternoon slide pulled stock indexes lower after the Federal Reserve held off on any new steps to boost the economy. The Fed cautioned that strains in global financial markets still pose a danger, a nod to Europe’s debt crisis.

The Dow Jones industrial average fell 66.45 points, or 0.6 percent, to close at 11,954.94. The Dow dropped more than 70 points in the last hour of trading and had risen as high as 126 points earlier Tuesday after two strong auctions of European debt.

The Standard & Poor’s 500 index fell 10.74 points, or 0.9 percent, to 1,225.73. The Nasdaq composite fell 32.99 points, or 1.3 percent, to 2,579.27.

The Federal Reserve portrayed the U.S. economy as slightly healthier but cautioned that it remains vulnerable to the European debt crisis. “Strains in global financial markets continue to pose significant downside risks to the economic outlook,” the Fed said. Stock indexes turned lower after the Fed released its policy statement at 2:15 p.m.

 

Oil rises on Iranian tensions, strong U.S. retail numbers

Oil prices jumped about 2 percent Tuesday as tensions rose in Iran and strong retail sales put a rosier glow on the U.S. economy.

Benchmark crude rose $2.37, or 2.4 percent, to end the day at $100.14 per barrel in New York. Brent crude, which is used to price foreign oil imported by some U.S. refineries, rose $2 to finish at $109.08 a barrel in London.

Analysts said traders reacted to more saber-rattling by Iran, as the country continues to deny accusations that it is developing nuclear weapons. Iran’s navy now plans to run drills, practicing a closing of the narrow Strait of Hormuz at the mouth of the Persian Gulf.

About a third of the world’s oil tanker traffic passes through that strategic waterway.

 

Postal Services to delay closing facilities until May

The U.S. Postal Service on Tuesday agreed to delay the closing of 252 mail processing centers and 3,700 local post offices until mid-May.

In a statement, the cash-strapped agency said it would hold off on closings by several weeks to give Congress more time to pass legislation that would give it more authority and liquidity to stave off bankruptcy. The Postal Service, which is expected to default Friday on a $5.5 billion payment to the Treasury, is forecast to lose a record $14.1 billion next year.

Last week, the Postal Service said it was moving forward on cutbacks. It had planned to begin closing processing centers as early as April, and shutter some post offices early next year.

“Our financial crisis continues,” said postal spokesman David Partenheimer. “But we’re hoping by working with senators and all members of Congress that they can pass comprehensive legislation that allows the Postal Service to return to profitability.”

The agreement by the Postal Service also means that cuts to first-class mail that would slow delivery and, for the first time in 40 years, eliminate the chance for stamped letters to arrive the next day, would not occur before May 15.