Stocks finished lower Wednesday after the Federal Reserve noted the U.S. economy was strengthening but also kept interest rates near zero and maintained its $120 billion in monthly asset purchases.
Investors on Wednesday also were awaiting President Joe Biden's first address to a joint Congress and earnings from Apple (AAPL) - Get Apple Inc. Report and Facebook (FB) - Get Meta Platforms Inc. Report.
“Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened,” the Fed said in a statement following the conclusion of its two-day meeting. “The sectors most adversely affected by the pandemic remain weak but have shown improvement.
"Inflation has risen, largely reflecting transitory factors," the statement added. "Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses."
During a news conference, Federal Reserve Chairman Jerome Powell said "it is not time yet" to start talking about tapering asset purchases.
The Dow Jones Industrial Average ended down 164 points, or 0.48%, to 33,820, the S&P 500 slipped 0.08% and the Nasdaq lost 0.28%.
"In general, there is little surprise" in the announcement from the Federal Reserve, said Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management. "The Fed is more optimistic about the economy, but there will be no change to monetary policy anytime soon.'
The benchmark 10-year Treasury rose slightly to 1.641% on Wednesday. It had risen sharply a day earlier after a heavy selloff in U.S. bonds pushed the yield to settle at 1.622%, the highest since April 14.
Biden, in his address Wednesday evening, is expected to unveil the second part of his infrastructure and jobs plan and new spending on government programs that likely will be paid for with higher taxes on the wealthy.
Biden's "American Families Plan" combines $1 trillion in spending with $800 billion in tax cuts and credits for middle- and lower-income families. The proposal also includes tax hikes that bring the top rate for individuals back to 39.6%.
Alphabet (GOOGL) - Get Alphabet Inc. Report finished up 3% Wednesday after the parent of Google posted first-quarter revenue, minus traffic-acquisition costs, of $45.6 billion, well ahead of analysts' estimates.
Search revenue in the quarter was $31.9 billion and YouTube ads generated sales of $6.01 billion, an increase of 49% from a year earlier. Revenue at the company’s cloud division advanced 46% to $4.05 billion.
Microsoft (MSFT) - Get Microsoft Corporation Report ended down 2.8%, despite fiscal third-quarter earnings and sales from the software and hardware maker topping analysts' estimates for the ninth straight quarter.
Boeing (BA) - Get The Boeing Company Report fell 2.9% Wednesday after the jet maker posted a wider-than-expected first-quarter loss - its sixth straight quarterly loss - and cautioned that the COVID-19 pandemic continues to challenge the global aircraft market.