(AP) -- A choppy day of trading on Wall Street ended with stocks modestly lower Wednesday after the Federal Reserve said it is leaving its key interest rate unchanged near zero, while noting recent improvement in the economy.
The S&P 500 slipped 0.1% after wavering between small gains and losses. Gains in communication services, energy and financial companies outweighed declines in technology and health care stocks. Bond yields also fell broadly, pulling back after an early rally.
In its latest policy update, the central bank left its benchmark short-term rate near zero, where it's been since the pandemic erupted nearly a year ago, to help keep loan rates down to encourage borrowing and spending. It also said that it would keep buying $120 billion in bonds each month to try to keep longer-term borrowing rates low.
"With no meaningful change to monetary policy or communication, this meeting was simply a message to market participants to sit back and observe as the economic recovery continues to unfold," said Charlie Ripley, senior investment strategist for Allianz Investment Management.
Stocks initially got a bump following the 2 p.m. Eastern release of the Fed's statement but shed those gains by the end of the day.
The S&P 500 dropped 3.54 points to 4,183.18. The benchmark index hit an all-time high on Monday. The Dow Jones Industrial Average lost 164.55 points, or 0.5%, to 33,820.38. The tech-heavy Nasdaq gave up 39.19 points, or 0.3%, to 14,051.03.
Smaller company stocks fared better than the bigger companies. The Russell 2000 index rose 2.89 points, or 0.1%, to 2,304.16.
Wall Street has been mostly grinding higher in recent weeks, pushing stock indexes to record highs, as the rollout of COVID-19 vaccinations, the massive support from the U.S. government and the Fed, and a string of encouraging economic data fuel expectations for a stronger economy and solid corporate profit growth this year.
The expectations for a strong rebound, and rising prices for oil, lumber and other commodities, have also spurred concerns over inflation and the prospects for higher interest rates. Those worries have helped fuel a rapid rise in bond yields from where they were at the start of the year.
In its remarks, the Fed noted that the economy and job market have "strengthened." And, while it acknowledged that inflation has risen, the central bank said it sees the increase as transitory. Fed officials have said they want to see inflation exceed their 2% annual inflation target before they'd consider raising rates.
The yield on the 10-year Treasury, which influences interest rates on mortgages and other consumer loans, eased following the Fed's statement, slipping to 1.61% from 1.62% late Tuesday.
The market welcomed the Fed's decision to maintain its support for the economy and keep rates low, said Sylvia Jablonski, chief investment officer at Defiance ETFs.
"We don't expect a rate hike until 2023," Jablonski said. "This, I believe, is almost no news is good news for the market. Any rhetoric to act more quickly would have been an issue."
Investors also focused Wednesday on corporate earnings, with dozens of companies reporting their quarterly results.
Google's parent company, Alphabet, rose 3% after it said its profits doubled from a year earlier, helped by a surge of digital advertising revenue as more Americans shopped online during the pandemic. Visa rose 1.5% after reporting solid financial results.
Google's solid gains helped send communications stocks higher. Oil prices rose and boosted energy company stocks. Those gains were offset by a downturn in technology and health care companies.
Investors punished several other companies that came up short with their most recent financial results. Boeing slipped 2.9%, while Spotify sank 12.3% after the music streaming company announced that subscriber growth had slowed more than expected.
Biotechnology company Amgen was among the biggest losers. It fell 7.2% after its first-quarter profits and revenue fell short of analysts' forecasts.
Facebook rose 5.5% in after-hours trading following the release of its latest earnings after the closing bell. Apple added 3.3% in extended trading after the company's profit soared in its latest quarter on higher iPhone sales.
Wall Street also will be tuning into President Joe Biden's speech to a joint session of Congress Wednesday evening. Biden is expected to lay out several parts of his agenda such as increased infrastructure spending, likely higher taxes on the wealthy and higher funding for government programs. The $1.8 trillion program will also create universal access to pre-kindergarten schooling as well as provide support for child care programs.