NEW YORK (AP) -- Wall Street gave up sharp gains to trade mixed Wednesday after the Federal Reserve cut interest rates by a quarter point but left investors in the dark about the central bank's next move. The Dow Jones industrial average, momentarily soaring above 13,000 for the first time since early January, traded only modestly higher in the last hour of trading.
The Fed said in a statement the economy remains weak and that policy makers remain uncertain about inflation. But they also said that their moves over the past several months "should help promote moderate growth over time and to mitigate risks to economic activity."
Policy makers did leave open many possibilities: the chance of another rate cut or lending boost if the economy weakens further, and the chance of a hold on rates if inflation starts accelerates at a worrisome pace.
"I don't think the Fed at this point is thinking one way or the other," said Diane Dercher, chief economist at Waddell & Reed. "I don't think in their mind that they have a next move in place."
But most investors had not only expected a quarter-point rate cut, but also a strong clue from the Fed that it was nearing the end of its rate-cutting campaign - something Wednesday's statement did not indicate clearly.
"The market had wanted to hear tougher talk on inflation, and some sort of talk that the easing has been adequate for a while, for the foreseeable future," said Scott Wren, equity strategist for A.G. Edwards & Sons.
With economic data in recent weeks coming in anemic but not as bad as expected, inflation has appeared to be the growing threat, due to news of food rationing, crude oil near $120 a barrel and U.S. roadside gasoline prices surging above $3.60 a gallon.
The Dow Jones industrial average rose 25.89, or 0.20 percent, to 12,857.83, after trading up 178 points shortly after the Fed's announcement.
Broader stock indicators turned lower, also having given up steep gains. The Standard & Poor's 500 index fell 2.67, or 0.19 percent, to 1,388.27, while the Nasdaq composite index fell 11.46, or 0.47 percent, to 2,414.64.
The benchmark 10-year Treasury note rose after the Fed's decision. Its yield, which moves opposite its price, fell to 3.75 percent, down from 3.82 percent late Tuesday.
The dollar fell against most other major currencies, while gold prices turned higher.
Oil prices extended Tuesday's slide of more than $3 a barrel. Light, sweet crude for June delivery fell $2.17 to settle at $113.46 a barrel on the New York Mercantile Exchange.
The stock market had rallied in the hours before the Fed decision thanks to stronger-than-anticipated economic and corporate reports.
The Commerce Department estimated that the U.S. gross domestic product rose at a very modest seasonally adjusted annual rate of 0.6 percent during the first quarter, while the Chicago purchasing managers' index showed another month of contraction in Midwest manufacturing.
However, many economists had forecast a lower rise in first-quarter GDP - some had even predicted a contraction - and on average, they had anticipated a reading of 48.0 for the April purchasing managers' index instead of the reported 48.2.
Meanwhile on Wednesday, General Motors Corp. said it lost $3.3 billion in the first quarter as strong overseas growth was offset by a strike at a supplier and weak U.S. sales. But the loss was smaller than Wall Street analysts expected, and shares of the Dow component jumped $2.15, or 10 percent, to $24.34.
Procter & Gamble Co., another Dow component, said price increases and cost controls helped offset higher commodity costs, pushing its third quarter profit up 8 percent. P&G lifted its full-year outlook, and its shares rose $1.43, or 2.2 percent, to $67.34.
The technology sector got extra downward pressure after software maker SAP AG said its profit slipped in the first quarter because of the weaker dollar and its takeover of another software company, Business Objects. Though sales were higher and SAP raised its 2008 outlook, shares fell $1.43, or 2.7 percent, to $51.02.
In other corporate news, Citigroup Inc. said late Tuesday it plans to sell $3 billion of common stock to boost its capital levels. The largest U.S. bank is raising more capital to offset more than $45 billion of write-downs and credit losses it has taken since June 30. Citigroup shares fell 96 cents, or 3.7 percent, to $25.36.
The Russell 2000 index of smaller companies fell 4.49, or 0.62 percent, to 714.44.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange, where volume came to 1.04 billion shares.
Overseas, Japan's Nikkei stock average fell 0.32 percent. Britain's FTSE 100 closed down 2.10 percent, Germany's DAX index rose 0.92 percent, and France's CAC-40 rose 0.39 percent.