Stocks recovered losses Tuesday at the very end of the session after the Federal Reserve said it had left out language in its announcement of an expected hike in the key funds rate.

The Dow Jones industrial average (search) gained 5.25 points, or 0.05 percent, to end at 10,256.95. The technology-laced Nasdaq Composite Index (search) was up 4.42 points, or 0.23 percent, to end at 1,933.07, while the broader Standard & Poor's 500 (search) index closed lower 0.99, or 0.09 percent, at 1,161.17.

The Dow was well into negative territory earlier but shortly before the closing bell the Fed announced it had left out a sentence from its formal statement saying longer-term inflation expectations remained well-contained.

At 2:15 p.m. EDT, the Federal Open Market Committee (search) announced it was raising the benchmark interest rate to 3 percent from 2.75 percent. Investors kept a close eye on the language used in the FOMC minutes, which promised future rate hikes would remain "measured," a way of assuaging fears that more aggressive rate hikes were not in the Fed's plans.

The Fed added that spending growth had slowed, partly due to higher energy costs, but that the labor market continued to improve gradually.

"If you're bullish you hang onto the positive statement and if you're bearish you hang onto the negative statement," said Elliot Spar, market strategist with Ryan Beck & Co.

"They said inflation was expected to be contained. They also said that companies have more pricing power and that inflation pressures have picked up, and left the door open to further rate hikes," Spar said.

Some concerns remained over inflation, although these were somewhat relieved by the announcement from the Fed just before 4:00 p.m. adding that longer-term inflation expectations were well contained.

That "could have helped the market" in the final minutes of trading, said Spar. "There was a nice pop. It was important to have it in but they'd already said that underlying inflation was expected to be maintained. Now they're a little more specific and that's a positive."

The Fed has steadily issued quarter percentage point rate hikes since June, when the benchmark rate stood at just 1 percent.

Earlier Tuesday, the Commerce Department reported new orders at U.S. factories rose by a modest 0.1 percent in March, confounding forecasts for a sharp drop after nondurable goods orders recorded a solid advance.

However, the vast majority of the orders were for consumable goods, while orders for big-ticket, durable items fell sharply — a sign that consumers aren't making the big purchases that fuel economic growth.

Falling crude prices gave a little support to stocks, with a barrel of light crude settling at $49.50, down $1.42, on the New York Mercantile Exchange (search). The 2.8 percent drop wiped out Monday's $1.20 gain.

Energy companies dipped with oil prices. Exxon Mobil Corp. (XOM) dropped 2.2 percent, or $1.24 to $56.50 and ConocoPhillips (COP) was down 3 percent, or $3.20 at $103.50.

In corporate news, conglomerate Tyco International Ltd. (TYC) weighed on the market after the it lowered its full-year earnings outlook, citing higher commodity costs and expected weakness in European automotive electronics. Tyco shares dropped $2.07 to $28.65 in heavy trading.

Shares of Boeing Co. (BA) and Lockheed Martin Corp. (LMT) were both higher after the companies announced a joint venture to produce rockets for the U.S. military, ending a bitter rivalry and setting the stage for the defense contractors to drop pending litigation involving the rocket business. Boeing was up 49 cents at $59.87; Lockheed added 55 cents to $62.41.

Oshkosh Truck Corp. (OSK), one of the U.S. military's top vehicle suppliers in Iraq, tumbled $4.73 to $72.02 after reporting earnings that exceeded its best estimates for the second quarter.

Dell Inc. (DELL) gave some support to the Nasdaq, up 2.26 percent to $35.75. Early Tuesday, Taiwan's Quanta, a contract maker of notebook computers for Dell and others, reported lower quarterly earnings but an analyst said the second quarter was likely to show improvement.

Trading was active, with 1.67 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.86 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Advancers and decliners were roughly even on the NYSE. Decliners outnumbered advancers by about 8-to-7 on Nasdaq.

The Russell 2000 index of smaller companies was down 1.38, or 0.24 percent, at 584.48.

Overseas, Japanese financial markets were closed Tuesday for Constitution Day, a national holiday. Trading will resume on Friday after the annual "golden week" holidays. In Europe, Britain's FTSE 100 closed up 1.24 percent, France's CAC-40 rose 0.4 percent for the session, and Germany's DAX index gained 0.51 percent.

Reuters and The Associated Press contributed to this report.