By Lewis Krauskopf
(Reuters) - Wall Street kept losses on Wednesday after the U.S. Federal Reserve held interest rates unchanged following its two-day policy meeting, and as investors digested another heavy round of earnings reports.
The U.S. central bank 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), which is seen benefiting in a rising rate environment, was up 0.5 percent after the Fed's bullish statement, leading all groups. Eight of the 11 major sectors were lower, 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 Dow Jones Industrial Average (DJI) rose 1.54 points, or 0.01 percent, to 20,951.43, the S&P 500 (SPX) lost 5.14 points, or 0.21 percent, to 2,386.03 and the Nasdaq Composite (IXIC) dropped 30.57 points, or 0.5 percent, to 6,064.79.
The benchmark S&P 500 has returned to near 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 (O:AAPL) shares fell 0.4 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.
In other corporate news, Sprint (N:S) shares slid 13.5 percent after the U.S. wireless carrier did not give specifics on deals it would pursue, even as its quarterly loss narrowed.
Delphi Automotive (N:DLPH) shares jumped 9.3 percent after the company said it plans 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 (N:NYT) rose 12.2 percent after the newspaper publisher reported its biggest quarterly revenue growth in six year.
Declining issues outnumbered advancing ones on the NYSE by a 1.83-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favored decliners.
The S&P 500 posted 30 new 52-week highs and 7 new lows; the Nasdaq Composite recorded 78 new highs and 65 new lows.