Yields on 10-year Treasury securities, a benchmark for home mortgages and corporate loans, tumbled to their lowest level in more than a year on Tuesday. Rates on 30-year Treasuries briefly fell below 4 percent. The yield on a 10-year Treasury note dipped to 2.765 percent from 2.83 before the announcement.

Stocks regained some of their losses from earlier in the day. At its close, the Dow Jones industrial average was down 54.5 points, or 0.51 percent, to 10,644.25.

From January 2009 to March 2010, the Fed bought $1.25 trillion in mortgage-backed securities and about $175 billion in debt owed by government agencies, primarily the housing finance entities Fannie Mae and Freddie Mac. The Fed had planned to allow the size of that portfolio to shrink gradually as the securities matured or the debts were prepaid.

Instead, the Fed will now reinvest those principal payments in longer-term Treasury securities. (The central bank said it would continue to roll over its holdings of other Treasury securities as they mature.)

The money involved is unclear. In March, the Federal Reserve Bank of New York estimated that at least $200 billion of the mortgage-related securities and debt would mature or be prepaid by the end of 2011.

But mortgage rates have dropped since then, giving borrowers an incentive to refinance and pay off existing mortgages, so the actual figure could be substantially larger.

By not allowing its debt holdings to decline below the level of $2.054 trillion at which they stood on Aug. 4, the Fed is preventing what economists have called the passive tightening of monetary policy. The Fed still has the option, if conditions warrant, of increasing its debt purchases.