Stocks finished mostly down Wednesday after the Federal Reserve left interest rates unchanged, as expected, but said progress has been made on the central bank's goals for employment and inflation, indicating changes to the Fed's stimulus could be coming.
The Dow Jones Industrial Average ended down 128 points, or 0.37%, to 34,984, the S&P 500 fell 0.02%, while the Nasdaq rose 0.7%.
The yield on the benchmark 10-year Treasury rose Wednesday to 1.229%.
“The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered,” the Fed said in a statement following the conclusion of its two-day meeting. “Inflation has risen, largely reflecting transitory factors. 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.”
The Federal Reserve also noted that the path to a sustained economic recovery "depends on the course" of the coronavirus and the pace of vaccinations.
The central bank also reiterated that inflation was running below its goal of 2%.
Since last September, the Fed has made monthly bond purchases of $120 billion a month. Central bank officials were expected to discuss Wednesday when they might begin pulling back on stimulus.
"Expect the Fed to use the next few months to develop and clarify its forward guidance for both bond purchases and rate hikes," said Jason Pride, chief investment officer of private wealth at Glenmede. "From there, the Fed will likely taper its bond purchases through 2022 and perhaps consider a gradual increase of the federal funds rate in the back half of 2023."
Stocks had traded mostly to the downside ahead of the Fed announcement as U.S. corporations reported quarterly earnings.
Boeing posted its first quarterly profit in more than two years, sending shares in the world's biggest planemaker up 4.1% on Wednesday.
Apple posted much stronger-than-expected fiscal third-quarter earnings amid surging iPhone sales and a big comeback in China, but the stock declined 1.2% Thursday after the tech giant warned that growth could be slowing.
Microsoft's fiscal fourth-quarter earnings and revenue, meanwhile, topped analysts' forecasts, but investor concerns about slowing growth in the company's Azure division limited gains for the stock Wednesday. Microsoft finished off slightly to $286.22.