Stock market ends little changed as Fed stands pat on interest rates

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Federal Reserve Chairwoman Janet Yellen didn’t have any surprises for the stock market in May.

The Dow Jones Industrial Average eked out a tiny gain while other major indexes posted small losses Wednesday after the Federal Reserve left monetary policy unchanged, as expected, and indicated it remains on track to deliver two more rate increases by year-end.

The SP 500 index

SPX, -0.13%

shed 3.04 points, or 0.1%, to close at 2,388.13. The largest component on the index, Apple Inc.

AAPL, -0.31%

 declined 0.3%, recovering partially from a more-than-1% decline earlier.

The Dow Jones Industrial Average

DJIA, +0.04%

 ticked up 8.01 points, or less than 0.1%, to end at 20,957.90. The Nasdaq Composite Index

COMP, -0.37%

retreated from its record close on Tuesday to fall 22.82 points, or 0.4%, to 6,072.55.

In a statement, the Fed’s rate-setting Federal Open Market Committee said a slowdown in first-quarter economic growth was “likely to be transitory” and described job gains as “solid.”

“They view the weak first-quarter GDP as ‘transitory’ and not something likely to impact policy. That officially puts two more interest-rate increases on the table,” said Matthew Peterson, chief wealth strategist at LPL Financial, who characterized the Fed’s stance as “pretty much as expected.”

“The market can get back to earnings, which have generally been good. The market will be very focused on the June meeting, but even here, a rate increase should not be problematic given what we believe is already priced in.“

Chris Zaccarelli, chief investment officer for Cornerstone Financial Partners, said the Fed’s comments were “neutral” given the absence of details on plans for the central bank’s $4.5 trillion balance sheet, which is expected to be unwound.

“The implication for stocks is that there is no news — positive or negative — and this should leave them trading in a range until we get more information out of Washington on tax cuts [and] deregulation,” he said.

Stocks had traded lower earlier in the session in response to Apple’s mixed quarterly results, but bounced off lows as the iPhone-maker’s stock trimmed losses. Apple’s stock had rallied into the earnings report, gaining a total of 2.7% in Monday and Tuesday’s sessions. Shares have risen 25% since January, topping the SP 500’s year-to-date gain of 6.5%.

Read: Apple’s stock falls after iPhone maker’s revenue, guidance miss forecasts

“We are seeing a little bit of weakness…partly because of Apple, but partly because of the fact that the index has failed to break out higher. In fact, over the past five sessions, the index has traded in the tightest range since 1984,” said Mike Antonelli, equity sales trader at Robert W. Baird Co.

“This is the reason why the VIX is so low,” he added.

Read: Wall Street’s ‘fear gauge’ is falling, bonds and the stock market are soaring — something’s gotta give

The measure of implied volatility on the SP 500, the CBOE Volatility index

VIX, +0.85%

 is at 10.68.

Earlier, market reaction to private-sector jobs data was muted. Private-sector employment growth slowed down in April as employers added 177,000 jobs, ADP reported Wednesday, down from a revised 255,000 jobs created in March.

Economic news: Markit’s services activity report for April showed a slight uptick at 53.1, and an increase from the previous month’s 52.5. Meanwhile, ISM reported a nonmanufacturing index of 57.5, indicating growth, which was above the consensus of 56 of economists polled by MarketWatch.

Individual movers: Shares in Yum Brands Inc.

YUM, +2.88%

 rose 2.9% after the KFC and Pizza Hut parent posted better-than-expected earnings before the open.

Clorox Co.

CLX, +0.85%

 rose 0.9% as the maker of cleaning products posted quarterly profit that topped expectations.

Reynolds American Inc.

RAI, -0.62%

 shares lost 0.6% as the company missed profit and sales expectations as cigarette volume underperformed.

Humana Inc.

HUM, -0.70%

 stock slid 0.7% after the health insurance company beat profit and revenue estimates.

Molson Coors Brewing Co.

TAP, -4.69%

 stock shed 4.7% after missing earnings forecasts.

Weight Watchers International Inc.

WTW, +9.30%

jumped 9.3% after it swung to a first-quarter profit.

Mondelez International Inc.

MDLZ, +2.95%

 shares rose 2.9% after the snack-food company’s quarterly results topped Wall Street estimates late Tuesday.

Shares of FireEye Inc.

FEYE, +12.86%

soared nearly 13% after reporting better-than-expected first-quarter earnings.

Other markets: Oil futures

US:CLK7

 edged up, while European stocks

SXXP, -0.04%

were mixed. Asian markets closed mostly lower, with several key exchanges closed for holidays. Gold futures

GCM7, -0.69%

 dropped, and a key dollar index

DXY, -0.08%

rose moderately. The yield on the 10-year Treasury note climbed 4 basis points to 2.32%.

—Victor Reklaitis contributed to this article.

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