Stocks took a nosedive after the Fed said it would hold steady on interest rates, but they soon returned to positive territory in a move that reflects the volatile moods on Wall Street.

Bernanke and company voted to leave short-term interest rates unchanged at 2 percent. Although most economists had been expecting that decision, there was a swell of hope that it might cut rates instead at the 11th hour. For investors, no such luck.

The Fed's statement was chock-full of otherwise downbeat and obvious observations: weak labor market, strained financial system, slowing economic growth, tight credit conditions, weak housing, slowing in export growth, and high inflation.

The Fed said it would continue to monitor developments and act as needed. The decision to leave rates unchanged had the unique distinction of being unanimous among the 10 members. New York Fed governor Tim Geithner was absent from the meeting due to the fact that he's at the center of the crisis currently playing out on Wall Street. The Fed injected $70 billion into the banking system today, on top of another $70 billion yesterday.

The Dow Jones industrials, which had been up about 30 points prior to the announcement, fell by more than 100 soon after it was released.

By leaving rates unchanged, the Fed is signaling that it hopes the market will work through this current crisis instead of incurring systemic risk that would require economic policy to fix.

"Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth," the statement read.

Whether or not this turns out to be true is anyone's guess.