New York, January 27^th (TradersHuddle.com) – Stocks gained, rebounding from earlier losses after the Fed left interest rates unchanged and will keep stimulus measures in place for an extended period of time.

The Dow Jones Industrial Average gained 41.87 points, or 0.41%. The S&P 500 index added 5.33 points, or 0.49%. The NASDAQ climbed 17.68 points or 0.80%. Market breadth was mixed. On the NYSE, decliners topped winners by a rate of 7 to 6. On the NASDAQ, advancers outpaced losers by a rate of 3to 2.

The market started under pressure amid global weakness and a disappointing outlook from Dow components Boeing (NYSE:BA) and Caterpillar (NYSE:CAT). Stocks slip further as a report on new home sales showed that the government tax credit is not providing as much lift to the housing market, as new home sales unexpectedly fell 7.6% in December, an improvement from November but short of expectations.

Stocks rebounded and staged a rally after the Federal Reserve release its statement after the end of its 2 day Federal Open Market Committee meeting. The Fed left interest rates unchanged and kept the extended period language in its statement, while using a slightly bullish language to describe the economic recovery.

The tech heavy NASDAQ, benefited from a rebound in Apple (NASDAQ:AAPL) shares, which were down below the $200 level, as Steve Jobs started the presentation of its new tablet pc, the iPad. Before the end of the presentation, as Steve Jobs unveiled the $499 pricing for the company’s newest creation entry level version, the stock moved up to close higher 0.94% to $207.88.

Banks bounced back at the open after a late sell-off Tuesday amid worries about Washington's crackdown on the sector ahead of the State of the Union tonight and a hearing next week on Capitol Hill.

Capitol Hill was also in focus, after Timothy Geithner testified before a House committee, which is investigating his role in the AIG bailout and the full payments received by the insurer counterparties.

United States Steel (NYSE:X) again posted the biggest decline in the S&P 500, tumbling 6.07% to $46.60. The Pittsburgh based steelmaker continued its slide after the weak outlook.

MedWestvaco (NYSE:MWV) posted the second worst loss in the broad market index, as shares lost 5.68% to $25.09. The packaging company reported a profit that missed estimates on weak sales. MedWestvaco earned $0.22 a share missing analyst estaimated by $0.01 a share.

The third worst stock in the S&P 500 index was McKesson Corp. (NYSE:MCK), as shares of information services provider for the healthcare industry lost 4.54% to $59.52. McKesson received a downgrade by Leerink Swann, after disappointing investors with yesterday’s earnings report.

The fourth largest decline in the S&P 500 was International Gaming Technology (NYSE:IGT), as shares of the maker of casino gaming solutions slid 4.51% to $19.04. IGT resumed its slide after rival Bally Technologies (NYSE:BYI) met Wall Street expectations, but revenue trailed market estimates due to declines in domestic game unit sales.

The fifth worst stock in the broad market index was Caterpillar (NYSE:CAT) after shares of the maker of bulldozers and excavators fell 7.29% to $51.71. The world’s largest earth moving equipment maker reported earnings that exceeded analysts’ estimates by 13 cents a share. Profit slid from a year ago and revenue fell 39% to 7.9 billion, shy of estimates. The maker of bulldozers expects up 10 to 25% from 2009, and profit is expected to be about $2.50 per share at the midpoint of the sales and revenues range.