NEW YORK: The S&P 500 ended lower on Wednesday after the U.S. Federal Reserve held interest rates and its monthly bond-buying program steady and gave no sign it was ready to reduce its support for the recovery.
Despite the improving economy, the Fed repeated the guidance it has used since December, saying it must see "substantial further progress" towards its inflation and employment goals before stepping back from its monthly bond purchases.
"The Fed underscored a lot of uncertainty remains. In this kind of a backdrop, with inflation being transitory, they'll continue to be pedal to the metal in terms of monetary policy," said Kevin Flanagan, head of fixed income strategy at WisdomTree Funds.
The S&P 500 was mostly unchanged immediately after the Fed's announcement, but it later rose to an intra-day record high after Fed Chair Jerome Powell said in a press conference that it was "not time yet" to discuss reducing the Fed's support for the recovering economy.
U.S. President Joe Biden is expected to unveil a sweeping $1.8 trillion package for families and education in his first joint speech to Congress on Wednesday, senior White House officials said.
Google parent Alphabet Inc hit a record high after reporting late on Tuesday a record profit for the second consecutive quarter and announcing a $50 billion share buyback.
Investors were awaiting quarterly reports after the bell from Apple and Facebook.
Unofficially, the Dow Jones Industrial Average fell 161.59 points, or 0.48%, to 33,823.34, the S&P 500 lost 3.27 points, or 0.08%, to 4,183.45 and the Nasdaq Composite dropped 39.19 points, or 0.28%, to 14,051.03.
Microsoft Corp's quarterly report late on Tuesday met sales expectations and beat profit estimates, but its shares fell and pressured the Nasdaq due to skepticism about one-off benefits included in the results and high hopes after a year-long rally.
Biotech Amgen Inc's decline weighed on the Dow after it said its first-quarter sales and profit fell due to a 7% drop in its net drug prices and a hit from the COVID-19 pandemic.
Boeing Co fell after posting a wider-than-expected quarterly loss and pausing 737 MAX deliveries over an electrical issue that has partly re-grounded the fleet.
Overall earnings per share for S&P 500 companies in the first quarter are expected to jump 39% from a year earlier, according to Refinitiv IBES data.
World shares stayed close to record highs while the dollar and Treasury yields slipped after the Federal Reserve held interest rates and its monthly bond-buying program steady, giving no sign it was ready to reduce its support for the U.S economy.
Investors had been anxiously waiting to see if the Fed would signal a tapering of its mass stimulus programme.
In a statement released after a two-day policy meeting, the U.S. central bank did note progress on vaccines and economic recovery, a slightly less negative view than its description in March.
That left some investors speculating that tapering could be on the cards sooner than anticipated.
"It sets up this dynamic as the year plays out: If this continues, does the Fed feel compelled to act?" said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
MSCI's broadest index of world shares continued towards its best month of the year so far.
The index, which tracks shares in 49 nations, rose 1.01 points, or 0.14 percent, to 706.55.
Some investors questioned whether recent gains are sustainable.
"You're seeing an irrational exuberance with money chasing money. It seems like we could be setting ourselves up for a correction," said Drew Horter, president and chief investment officer of Tactical Fund Advisors in Cincinnati.
The Dow Jones Industrial Average fell 164.55 points, or 0.48%, to 33,820.38, the S&P 500 lost 3.54 points, or 0.08%, to 4,183.18 and the Nasdaq Composite dropped 39.19 points, or 0.28%, to 14,051.03.
The pan-European STOXX 600 index ended largely unchanged, with bank stocks leading gains among the regional sectors. The subindex ended 1.5% higher.
Treasury yields dipped in the absence of any immediate talk about tapering, while the dollar stayed in defensive mode.
April is currently set to be its cruellest month for the greenback since last July.
Benchmark 10-year notes last rose 3/32 in price to yield 1.6129%, from 1.622% late on Tuesday.
The dollar index fell 0.354%, with the euro up 0.32% to $1.2129.
Traders were awaiting a packed schedule of U.S. corporate earnings after the bell along with U.S. President Joe Biden's first address before a joint Congress session later this evening.
Biden will likely underscore his administration's plans for infrastructure and stimulus spending.
That would normally be positive for stocks, but analysts say so much economic optimism is already priced into the equity market that it is difficult to budge equities from current levels.
Oil prices rose more than 1% after U.S. distillate inventories posted a large drawdown and refining activity picked up, boosting hopes for rising fuel demand.
Brent crude futures settled at $67.27 per barrel, up 1.3%. U.S. crude futures settled at $63.86 per barrel, up 1.5%.
Spot gold added 0.3% to $1,781.50 an ounce. U.S. gold futures settled 0.22% lower at $1,773.20 an ounce.
In the cryptocurrency market there was excitement as the European Investment Bank said it would sell a two-year digital bond worth 100 million euros ($120 million) on the ethereum blockchain network.
Rival cryptocurrency Bitcoin fell 0.3%.
($1 = 0.8278 euros)- Reuters