NEW YORK, May 7 (Reuters) - U.S. stock prices retreated on Wednesday after the Federal Reserve kept interest rates unchanged, but the Dow was able to cling to slight gains after the widely anticipated move.
In keeping rates unchanged, the central bank said the risks of both higher inflation and unemployment had risen, further clouding the economic outlook as the Fed grapples with the impact of Trump administration tariff policies.
Shortly after the Fed's decision, the Dow Jones Industrial Average (.DJI), was up 13.95 points, or 0.03%, to 40,842.95, the S&P 500 (.SPX), was down 27.38 points, or 0.49%, to 5,579.53 and the Nasdaq Composite (.IXIC), was off 182.19 points, or 1.03%, to 17,507.47.
"The Fed statement was a statement of the obvious. They gave roughly equal airtime to the threats to growth and inflation, so that tells us we need to wait and see how the data shake out between now and the June meeting before deciding whether they're going to prioritize keeping inflation expectations contained or to address any hit to growth," said Brian Jacobsen, Chief Economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
"The Fed isn't being complacent, twiddling their thumbs - they're like the rest of us - monitoring things vigilantly."
Investors will closely monitor commentary from Fed Chair Jerome Powell for insight on how policy makers plan to navigate through President Donald Trump's global trade war.
Markets are still largely pricing in a rate cut of at least 25 basis points from the Fed at its July meeting, according to data compiled by LSEG.
Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE, while decliners outpaced advancers by a 1.19-to-1 ratio on the Nasdaq.
The S&P 500 posted 16 new 52-week highs and eight new lows, while the Nasdaq Composite recorded 48 new highs and 86 new lows.
Reporting by Chuck Mikolajczak, additional reporting by Purvi Agarwal and Johann M Cherian in Bengaluru; Editing by David Gregorio
