NEW YORK - Traders put their September stock rally on hold and moved into Treasurys and gold Wednesday, a day after the Federal Reserve said it was ready to take more action to boost the economy.
The Dow Jones industrial average fell 21 points.
With no new economic data out Wednesday and the Fed's announcement late Tuesday having a bigger impact on the bond and currency markets, Bob Auer, portfolio manager of the Auer Growth Fund, said it was natural for stocks to pause.
Major indexes have soared this month as economic reports have consistently indicated the economy continues to grow, albeit slowly.
"People are saying, 'I've got some profits; let's book 'em,'" Auer said.
Entering Wednesday, the Dow had risen 13 of the past 15 days and climbed 7.5 percent so far in September.
The Fed didn't announce specific actions to strengthen the economy, but investors interpreted its statement as a signal that the central bank could step up its bond-purchasing program down the line.
Investors had little incentive to move more money into stocks, so they turned their focus to bonds and gold. Treasurys rose again, pushing their yields lower, and gold climbed to another record.
If the Fed starts purchasing bonds, it would have the dual effect of raising demand for Treasurys and hurting the value of the dollar. That's why bond prices rallied Wednesday and traders swapped dollars for gold and other currencies.
The Dow fell 21.72, or 0.2 percent, to 10,739.31. The Standard & Poor's 500 index fell 5.50, or 0.5 percent, to 1,134.28, while the Nasdaq composite index fell 14.80, or 0.6 percent, to 2,334.55.
The yield on the 10-year Treasury note, which moves opposite to its price, fell to 2.55 percent from 2.58 percent late Tuesday. Its yield is often used to set interest rates on mortgages and other loans.
Gold climbed to a record $1,298 an ounce before falling back to $1,292.10.
The euro hit a five-month high against the dollar.
In corporate news, Microsoft Corp. shares dipped 54 cents, or 2.2 percent, to $24.61 after the company said it was raising its dividend for the first time in two years.
Adobe Systems Inc. shares plummeted after the computer software maker said its fiscal third-quarter profit surged, but it said revenue during the current quarter will likely fall short of expectations. Adobe shares fell $6.27, or 19 percent, to $26.67.