Wall Street report: Tuesday close

AMERICA's central bank decided not to raise official interest rates because it needs more time to see if the economy recovery can stay the course. The Federal Reserve Board, headed by Alan Greenspan, said there were signs of recovery, but not enough to lift interest rates off 40-year lows of 1.75%.

Noting 'considerable upward impetus' in inventory investment and yet uncertainty in retail demand, the Fed said risks were 'balanced' with interest rates where they were. The decision and the Fed's comments were widely anticipated by markets and investors appeared to take the announcement in stride.

The Dow Jones Industrial Average, which traded up 110 points prior to the announcement, closed higher by 28.51 points to 9,836.55. The Nasdaq Index finished the day down 4.66 points to 1,573.82.

Most economists had not expected the Fed to start raising rates until its August meeting due to the tepid recovery, tame inflation and improving productivity as companies wring efficiencies from their operations and cut their workforces.

Investors appeared more preoccupied with profits that interest rates as the day wore on. Retailers showed strength with Wal-Mart up $1.02 or 1.9% to $55.01.

Techs were generally higher. IBM, hammered to a four-year low on Monday, recovered 50 cents or 0.7% to $76.50 as big name techs steadied. Intel rose 37 cents or 1.4% to $26.15. Microsoft gained 85 cents or 1.8% to $49.47. Hewlett-Packard firmed 19 cents or 1% to $18.41 as Morgan Stanley said that the shares looked cheap in the wake of selling related to H-P's controversial $18.5bn merger with Compaq Computer.

Oracle was flat at $8.25, down from $20 in the past year, after JP Morgan Securities became the latest investment firm to express concern about the software maker's outlook. Chipmaker Broadcom tumbled $5.22 or 17% to $24.72 after Motorola chose rival Texas Instruments to make semiconductors for a generation of cable modems. Texas Instruments' shares were off slightly at $27.51.

Cisco Systems finished the regular session up 19 cents or 1.5% to $13.08 and then jumped to $14 in extended hours after CEO John Chambers called the company's last quarter 'a home run.'

Enron rival Dynergy slumped $2.59 or 17% to $12.26, down from $57.50 a year ago, on a newspaper report alleging that it might have helped manipulated energy prices in California last year.

AOL Time Warner closed near the unchanged line after touching a new all-time low on Monday. Battered telecom Worldcom rebounded 37 cents or 20% to $2.21.