Stocks gave up earlier gains on Wednesday and sank lower after Federal Reserve Chair Jerome Powell signaled the central bank has yet to decide if it will cut interest rates in September.
The S&P 500 Index (NYSE: SPY) slipped 0.12% and closed at 6,362.90, while the Dow Jones Industrial Average (NYSE: DIA) fell over 170 points to settle at 44,461.28 -- at their session highs, the S&P was up 0.4% and the Dow rose 0.2% intraday on Wednesday. The tech-heavy Nasdaq Composite (NASDAQ: QQQ), meanwhile, gained 0.15% to close at 21,129.67.
In the spotlight, the Federal Open Market Committee (FOMC) voted 9-2 to hold the central bank's overnight borrowing rate steady at its current range of 4.25% to 4.50% on Wednesday, with opposition coming from Governors Michelle Bowman and Christopher Waller.
"Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year," the Fed's post-meeting statement read. "The unemployment rate remains low, and the labor market conditions remain solid. Inflation remains somewhat elevated."
While investors widely expected the Fed to hold interest rates on Wednesday, stocks turned lower after Fed Chair Jerome Powell said in post-meeting remarks that policymakers have yet to decide if a September rate cut is necessary to support the economy.
"We have made no decisions about September," Powell said. "We don't do that in advance. We'll be taking that information into consideration and all other information we get as we make our decision."
Powell added that the central bank will continue to monitor potential impacts of tariffs on inflation ahead of its next meeting.
"Our obligation is to keep longer term inflation expectations well anchored and to prevent a one time increase in the price level from becoming an ongoing inflation problem," he said.
Earlier in the session, a stronger-than-expected U.S. gross domestic product (GDP) reading helped lift stocks higher ahead of the Fed's decision. The Commerce Department reported on Wednesday that the U.S. economy grew by 3% in the second quarter, coming in ahead of economist estimates for 2.3% growth.
Labor market data also captured some of Wall Street's attention on Wednesday, as private payroll additions rose at a higher-than-expected pace in July as the job's market -- a key factor in consumer confidence -- remains strong despite current headwinds such as inflation and trade uncertainties.
Private employers added a seasonally adjusted 104,000 payrolls for the month, payroll processor ADP reported Wednesday, reversing June's loss of 23,000 and soaring above analyst estimates for 64,000 additions.
"Our hiring and pay data are broadly indicative of a healthy economy," said Nela Richardson, chief economist at ADP, in a statement. "Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient."
The ADP's report comes ahead of the Labor Department's "official" jobs report set to release on Friday, which is expected to show 100,000 nonfarm payroll additions in July and the unemployment rate ticking higher to 4.2%.
President Donald Trump's upcoming August 1 trade deal deadline was also in-focus beyond the central bank's decision on Wednesday. Trump took to his social media platform Truth Social on Wednesday to state: "THE AUGUST FIRST DEADLINE IS THE AUGUST FIRST DEADLINE -- IT STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!"
Earlier Wednesday, Trump said India will face a 25% tariff on most imports starting on Friday in retaliation to their trade barriers.
"Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country," Trump wrote on Truth Social.
On the earnings front, Starbucks (NASDAQ: SBUX) shares came under pressure after the coffee-chain reported its sixth straight quarter of same-store sales declines late Tuesday. However, CEO Brian Niccol said in a prerecorded video statement that "while our financial results don't yet reflect all the progress we've made" with the company's announced turnaround strategy to reinvigorate its business, Niccol believe's Starbucks' results show its efforts are "gaining momentum."
"In the U.S., partner engagement is rising, customer connection scores are up, shift completion is at a record high, non-Starbucks Reward customer transactions returned to growth, and more coffeehouses are delivering positive transaction comps," Niccol said in a the video.
Looking ahead, market participants will react to earnings reports from mega-caps Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META), as well as June's personal consumption expenditures reading on Thursday.