The Dow Jones industrial average rose about 5 points, but broader indexes fell and losing stocks outnumbered advancers on the New York Stock Exchange. Treasury prices rose, pushing down interest rates. The yield on the benchmark 10-year Treasury note fell to its lowest level in more than a year.
Stocks fell early in the day after the government said new home sales dropped by a third to a record low last month. Sales fell to a seasonally adjusted annual pace of 300,000. Economists polled by Thomson Reuters had forecast sales would drop to a seasonally adjusted annual rate of 410,000.
The Dow lost as much as 66 points after the housing numbers came out. On Tuesday, an unexpected slide in sales of existing homes also hurt stocks. Existing homes make up a far bigger part of the market than new homes, but traders were braced for more bad news Wednesday.
"I think the market is, thankfully, already getting used to the idea that housing is going to fall off a cliff between the end of the homebuyer tax credit and now," said John Canally, economist at LPL Financial. The homebuyer's credit expired April 30, and its absence is expected to be felt beyond the May sales figures.
Traders picked up stocks of companies that sell consumer staples because they are considered safer in weak economies. Procter & Gamble Co., which makes Tide detergent and Gillette razors, rose 1.1 percent. Kraft Foods Inc. also rose. Fortune Brands Inc., which makes doors, bathroom faucets and other goods used in homes, fell 1.4 percent. Leggett & Platt, whose products include bedding and furniture parts, lost 1.2 percent.
"I can't remember a time where I've seen just so much so much uncertainty," said Adam Gould, senior portfolio manager at Direxion Funds in New York.
The market's moves were subdued for much of the day and trading volume was light, as it has been for weeks. The lack of action in the morning came as traders watched World Cup soccer matches. Cheers erupted on the floor of the New York Stock Exchange when the U.S. beat Algeria.
Traders then found little to do but wait for the Fed's midafternoon announcement. The central bank's economic statement issued after a meeting of its policymaking committee contained few surprises. The Fed said that "financial conditions have become less supportive of economic growth." The Fed cited what it called "developments abroad" but didn't mention Europe by name.
Stocks have fallen from 2010 highs in April on worries that debt problems in Europe would spread and hurt a global rebound.
"The Fed is acknowledging what we're all seeing," said Mike Materasso, co-chair of the fixed income policy committee at Franklin Templeton. "There are problems in Europe, we've gotten a string of data in the U.S. with regard to employment, housing and even retail sales that is disappointing."
The Dow closed with a gain of 4.92, or 0.1 percent, to 10,298.44 after being up nearly 75 points in afternoon trading. The index lost 149 points Tuesday after the home sales report.
The broader Standard & Poor's 500 index fell 3.27, or 0.3 percent, to 1,092.04, and the Nasdaq composite index fell 7.57, or 0.3 percent, to 2,254.23.
Bond prices rose, driving down interest rates. The yield on the 10-year note fell to 3.12 percent from 3.17 percent late Tuesday. It hit the lowest level since May 2009.
The dollar fell against other major currencies. Crude oil fell $1.28 to $76.57 per barrel on the New York Mercantile Exchange.
The swings in stocks came as traders prepared for a reshuffling Friday of some of the stocks contained in the Russell 2000 index of smaller companies.
Procter & Gamble rose 66 cents, or 1.1 percent, to $61.38, while Kraft rose 18 cents to $29.54.
Fortune Brands fell 59 cents, or 1.4 percent, to $42.99, and Leggett dropped 27 cents, or 1.2 percent, to $21.71.
Homebuilder stocks mostly rose after a recent slide. PulteGroup Inc. advanced 19 cents, or 2.1 percent, to $9.05, while Toll Brothers Inc. rose 43 cents, or 2.5 percent, to $17.49.
Falling stocks narrowly outpaced those that rose on the NYSE, where consolidated volume came to 4.6 billion shares, in line with Tuesday.
The Russell 2000 fell 1.66, or 0.3 percent, to 644.25.
Britain's FTSE 100 fell 1.3 percent, Germany's DAX index dropped 1 percent and France's CAC-40 fell 1.7 percent. Japan's Nikkei 225 stock index fell 1.9 percent.