Stocks Near Neutral In Reaction To Fed

Stocks settled slightly higher Friday in the first session following the Federal Reserve's surprise discount-rate hike.

The S&P 500 added 0.2%. The Nasdaq and the Dow edged up 0.1% each. The NYSE composite was up fractionally.

Volume rose across the board. Friday was an expiration day for February options, which often gives a boost to volume.

The Street initially showed some nervousness about the Fed's action. Stocks opened moderately lower.

After the early hesitation, cautious acceptance prevailed.

The major indexes found traction about a half hour into the session and climbed steadily. The indexes gave up much of their gains in an afternoon decline.

Analysts said the discount-rate change was largely symbolic. It involves the rate the Federal Reserve charges banks for overnight loans from the Fed. In contrast, the federal funds rate, which remains unchanged, has a larger ripple effect. It involves the rate banks charge each other for short-term loans.

In the wake of the 2000-03 bear market, the Fed didn't raise the federal funds rate for more than a year. The first federal funds hike came 15 months after the market made a follow-through day in March 2003 that started the next bull market.

How did the market react to the rate increases when they began in mid-2004? The Nasdaq fell for six weeks and then began a 20-week advance.

Despite higher volume in the major indexes, top-rated stocks were mostly quiet Friday. Only a few made big moves in fast trade, despite the increase in market volume.

The S&P 500 gained 3.1% for the week; the Dow and NYSE composite 3% each; and the Nasdaq 2.8%. It was one of the market's best weeks of the year.

In economic news, the consumer price index showed less inflation than analysts expected.

5:15 p.m. Update: After-hours action was calm Friday with no notable economic news or companies reporting.

Monday, however, will be busy. Over 100 companies are scheduled to release earnings, and few have specified when.

No U.S. economic news is scheduled before the market opens. The first two items on the day's docket are comments from Janet Yellen, San Francisco Fed President, at 10:30 a.m. EST, followed by Fed Chief Ben Bernanke at 11 a.m. EST.