Wall Street ended slightly lower on Wednesday after the U.S. Federal Reserve held interest rates unchanged and investors digested another heavy round of earnings reports.
The benchmark S&P 500 reduced its losses following the statement from the U.S. central bank, which downplayed weak first-quarter economic growth and emphasized the strength of the labor market, in a sign it could tighten monetary policy as early as June. Investors are betting on a 65 percent chance of a hike in June, according to Thomson Reuters data.
The S&P financial sector .SPSY, seen benefiting in a rising rate environment, ended up 0.6 percent after the Fed's bullish statement, leading all groups. Seven of the 11 major sectors finished negative, however.
The Fed is in its first tightening cycle in more than a decade after it spent years keeping rates near zero to help the economy following the 2007-2009 recession.
"The Fed is communicating its mantra of gradual rate hikes," said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. "The next time they will likely raise rates would be June."
The S&P 500 .SPX lost 3.04 points, or 0.13 percent, to 2,388.13. The Nasdaq Composite .IXIC dropped 22.82 points, or 0.37 percent, to 6,072.55, its biggest percentage drop in about three weeks.
The Dow Jones Industrial Average .DJI rose 8.01 points, or 0.04 percent, to 20,957.9.
The S&P 500 has returned to within 8 points of its all-time high during an earnings season that generally come in above expectations.
First-quarter profits at S&P 500 companies are estimated to increase 14.2 percent, its strongest growth since 2011, according to Thomson Reuters I/B/E/S.
Apple (AAPL.O) shares fell 0.3 percent, weighing on indexes, but recovering from steeper losses after the company's quarterly report, in which it reported a surprise fall in iPhone sales.
The S&P 500 has climbed 11.6 percent since President Donald Trump's Nov. 8 election, fueled by hopes for tax cuts, deregulation and infrastructure spending, although investors have questioned his ability to enact his agenda.
"There was a lot of optimism based on the Trump agenda at the start of the new year and it has started to peter out," said Robert Pavlik, chief market strategist at Boston Private in New York.
In other corporate news, Sprint (S.N) shares slid 14.3 percent after the U.S. wireless carrier did not give specifics on deals it would pursue, even as its quarterly loss narrowed.
Delphi Automotive (DLPH.N) shares jumped 10.9 percent. The company said it planned to spin off operations tied to internal combustion engines and focus on technology for electrically powered and self-driving vehicles. The stock was the biggest percentage gainer in the S&P 500.
The New York Times Co (NYT.N) rose 12.6 percent after the newspaper publisher reported its biggest quarterly revenue growth in six years.
After the market close, Facebook Inc (FB.O) shares fell more than 1 percent even as the social media company reported a 76.6 percent surge in quarterly profit.
About 7.3 billion shares changed hands in U.S. exchanges, above the 6.6 billion daily average over the past 20 sessions.
NYSE declining issues outnumbered advancing ones by 1.47-to-1. On Nasdaq, a 1.79-to-1 ratio favored decliners.
The S&P 500 posted 31 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 83 new highs and 71 new lows.
(Reporting by Lewis Krauskopf in New York; Additional reporting by Richard Leong in New York and Tanya Agrawal in Bengaluru; Editing by Nick Zieminski and Peter Cooney)