US stocks ended lower overnight, but off their lows of the day, with the Federal Reserve holding interest rates steady as expected.
US stocks ended lower overnight, but off their lows of the day, with the Federal Reserve holding interest rates steady as expected.
Along with this, fed chair Jerome Powell offering soothing comments for investors.
Technology shares were the biggest drag on the S&P 500. Nvidia shares fell 4.1 per cent and Microsoft finished 1.1 per cent lower on Wednesday, two days after a tech selloff sparked by Chinese startup DeepSeek's launch of AI models it said were cost-effective and ran on less advanced chips compared to US-based OpenAI.
Stocks initially extended losses after the fed statement, with the Nasdaq at one point down more than 1 per cent in afternoon trading.
The US central bank dropped language saying inflation "has made progress" towards the Fed's 2 per cent inflation goal, noting only the pace of price increases "remains elevated."
Its decision to hold the policy rate steady was widely anticipated following three consecutive rate cuts in 2024 that reduced the fed's benchmark rate by a full percentage point.
Indexes pared losses as Powell began to speak at a press conference following the release of the policy statement.
"We do not need to be in a hurry to adjust our policy stance" and monetary policy is "well positioned" for the challenges at hand," Mr Powell said.
"Powell does a great job of calming markets," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, adding that "a strong economy gives the Fed plenty of wiggle room."
The Dow Jones Industrial Average fell 136.83 points, or 0.31 per cent, to 44,713.52, the S&P 500 lost 28.39 points, or 0.47 per cent, to 6,039.31 and the Nasdaq Composite lost 101.26 points, or 0.51 per cent, to 19,632.32.
"The fed didn't hit the markets with any surprises," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Powell also said it is too soon to say what President Donald Trump's policies will do and the central bank will take its time assessing what the new government policy regime means.
Investors have been worried about Trump's proposed tariffs, which could exacerbate inflationary pressures and slow the pace of rate cuts.
The fed gave little insight into when further reductions in borrowing costs may take place.
Traders are pricing in around 44 basis points of cuts by year-end, down from around 48 basis points before the fed statement.
That reflects falling confidence that the US central bank will make two 25 basis point rate reductions this year.
The December reading of the personal consumption expenditures price index, a crucial metric in assessing the inflation trajectory, is due on Friday.
After the closing bell, Microsoft reported slower-than-expected growth in its crucial Azure cloud business despite beating estimates for overall quarterly revenue. Its shares were down 1.5 per cent in after-hours trading.
During the regular session, shares of cloud services company F5 jumped 11.4 per cent after it forecast second-quarter revenue above estimates and reported a first-quarter revenue beat.
Declining issues outnumbered advancers by a 1.6-to-1 ratio on the NYSE. There were 151 new highs and 68 new lows on the NYSE.
On the Nasdaq, 1,829 stocks rose and 2,548 fell as declining issues outnumbered advancers by a 1.39-to-1 ratio.
Volume on US exchanges was 13.00 billion shares, compared with the 15.5 billion average for the full session over the last 20 trading days.
