Dow closes up 430 after whipsaw trading

The Federal Reserve spoke -- and the financial markets responded with volatility -- first a dive and then a recovery. The Dow closed up about 430 points on a recovery from a midafternoon plummet of 176 points.

The Dow Jones Industrial average had been trading up through the day until the Fed said that economic growth this year has been "considerably slower" than it expected and that it will keep interest rates near their record low of almost zero until at least the middle of 2013.

The market plummeted and just as quickly began recovering. At the close, the Dow was up about 400 points at 11210.8. The S&P 500 was up 53.1 at 1172.6, and the Nasdaq was up 124.8 points at 2482.5.

The Fed's statement also said that it expects "a somewhat slower pace of recovery over coming quarters"

Oil prices sank $2.03 per barrel to $79.29 within minutes after the statement was released. Gold, considered a safe haven when other investments are tumultuous, rose again to $1,773.60 per ounce, up from its $1,713.20 closing price on Monday.

Boosting the stock market isn't one of the Fed's jobs, but that hasn't stopped investors from parsing every word of the statements made by the Fed and its chairman, Ben Bernanke.

The Fed's mandate is to keep prices stable and promote low unemployment, not boost stocks. So stock dives after Fed comments has happened before. Most recently, the stock market suffered a late-day dive June 3, when Bernanke spoke in public at a conference. Investors said they were looking for a hint of new plans to spur economic growth. When that didn't come, all three major indexes sank.

After Bernanke outlined the plan for a second round of quantitative easing in August 2010, the S&P 500 index gained 28 percent over eight months. Investors pointed to that rebound as evidence that quantitative easing worked -- and so did Bernanke. This sentiment led some people to believe that if stocks fall too far, the Fed would come to the rescue.

Investors have been worried about the first-ever downgrade to the U.S. credit rating by Standard & Poor's, the slowing U.S. economy, debt problems in Europe and rising inflation in less-developed countries.

Economies across the globe are also struggling.

In Europe there is fear of default by Spain and Italy, and inflation in less-developed countries is eating away advances. China's inflation rose to a 37-month high in July.

Still some corporate earnings are strong. Among the 441 companies in the S&P 500 index that have already reported their second-quarter earnings, profits are up 12 percent from a year ago.

In addition Apple has surpassed Exxon Mobil as the most valuable company in the United States shortly before 2 p.m. Tuesday. Apple Inc.'s stock gained 3.4 percent to $365.10 Tuesday afternoon, bringing the iPhone and iPad maker's market capitalization to about $338 billion. Exxon Mobil Corp. shares, meanwhile, were trading at $69.23, down 1.4 percent. That gives the oil company a market cap of $337 billion.

And Dish Network Corp.'s second-quarter net income rose 30 percent to $334.8 million on stronger revenue.