The S&P 500 recovered from a low of 1,083.11, downward spike that occurred minutes after the Federal Open Market Committee statement, to trade at 1,093.54, up 0.12 percent at 3:27 p.m. in New York.

The dollar also gained sharply against the yen after the statement, although it remains relatively unchanged versus the euro.

The FOMC espoused a bearish economic view. The statement said the economy has weakened since the Committee met in December.

“Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending,” the Fed officials said.

The Committee also cites a slowing global demand and tight credit conditions for households. The FOMC anticipates recovery later in the year, but cautions that “downside risks to that outlook are significant.”

The Fed is not alarmed about inflation pressures in the short term and vows to “support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level.”

Fed Chairman Ben Bernanke’s term expires at the end of this month. His confirmation vote for a second term will take place tomorrow. According the latest tally by the Wall Street Journal, 51 Senators will vote “yes” while 19 will vote “no.” The rest are undecided.

Bernanke needs 60 votes for a filibuster-proof confirmation. He already has the public support of Senate Majority Leader Harry Reid, President Obama, Treasury Secretary Tim Geithner, and even Warren Buffet.

One of the main reasons for the Bernanke opposition in the Senate is his alleged irresponsible stewardship of taxpayer money and a lack of transparency on how his spends it. If the FOMC statement today is interpreted as a sign that the Fed Reserve will continue its level of spending, Bernanke may run into staunch opposition tomorrow.

However, Obama was assured by various Senators that Bernanke will have enough votes and both the Majority Leader and the Minority Leader in the Senate expect Bernanke to be confirmed tomorrow.

Investors are also looking ahead for details of Obama’s fiscal policy in the State of the Union Address tonight. Obama has vowed to create jobs for the middle class and work towards a stronger economy, although the administration is plagued by a swelling budget deficit.

Ben Bernanke Timothy geithner Barack obama