Stock indexes slip after Federal Reserve leaves rates alone

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.