NEW YORK (AP) 鈥� Wall Street held steady after the Federal Reserve followed through on expectations and raised its benchmark interest rate to its highest level in more than two decades. Treasury yields fell following Wednesday鈥檚 announcement, which traders hope will mark the final increase of this cycle. The S&P 500 closed just barely lower. The Dow rose 84 points, or 0.2%, and the Nasdaq composite fell 0.1%. Microsoft fell 3.7% following its earnings report, while Alphabet rose 5.6%. The parent company of Google and YouTube reported better profit and revenue than analysts expected.
THIS IS A BREAKING NEWS UPDATE. AP鈥檚 earlier story follows below.
NEW YORK (AP) 鈥� Wall Street is holding relatively steady Wednesday after the Federal Reserve followed through on expectations and to their highest level in more than two decades.
The S&P 500 was 0.2% lower in afternoon trading after flipping between small gains and losses. The Dow Jones Industrial Average was up 16 points, or less than 0.1%, at 35,454, as of 3:17 p.m. Eastern time, and the Nasdaq composite was 0.4% lower.
Treasury yields were easing in the bond market after Fed Chair Jerome Powell also said no decision has been made about what to do with rates in the future. That may have bolstered hopes among traders that Wednesday's hike may be the last one for a long time.
The parent company of Google and YouTube reported better profit and revenue for the spring than analysts expected.
That helped to offset a 4.2% drop for . It fell despite also reporting better profit and revenue for the spring than expected. Analysts said the company made comments that were perhaps intended to rein in huge expectations for upcoming growth from artificial intelligence. Investors also may have been hoping to hear more about when slowing growth at its Azure cloud computing business will trough.
What Big Tech titans do matters more for Wall Street than other stocks because they have become so influential due to their massive size. Seven stocks alone accounted for most of the S&P 500鈥檚 returns through the first half of this year, largely on expectations that their explosive growth will continue. They鈥檒l need to deliver big profits to justify those gains.
Another member of the 鈥淢agnificent Seven鈥� that's overshadowed the rest of the market will report its results after trading closes for the day, Meta Platforms. The stock has more than doubled so far this year, while Alphabet and Microsoft are both up roughly 40%.
Jones Industrial Average, which has less of an emphasis on Big Tech than the S&P 500. The aircraft maker reported a smaller loss for the spring than analysts expected, and revenue topped expectations. Boeing's stock rose 7.6%.
The bond market was showing more action than the broad stock market following hte Fed's latest move.
In hopes of wrestling high inflation down further, to a range of 5.25% to 5.50%. That's its highest level since 2001 and up from virtually zero early last year.
But the hope among traders is that will be the last increase of this cycle because inflation has been on a downward trend since last summer. Such hopes have been another big reason for Wall Street鈥檚 big rally this year. That鈥檚 because , raising the risk of a recession and hurting prices for investments.
The economy has so far defied many predictions for a recession, largely because of a remarkably solid job market that has allowed U.S. households to keep spending. That has hopes rising that the Federal Reserve can pull off a 鈥渟oft landing鈥� for the economy where high inflation falls back to its target without a painful recession.
Some critics, though, say traders may have rushed into such hopes too quickly and too strongly. Inflation is still high, even if it鈥檚 come down, and the Fed may need to keep rates high for a while to drive it down to its 2% target. A recession is still a risk, they say.
The Fed's Powell said Wednesday that rates will likely need to stay high for a while to drive inflation lower, but he was noncommittal about the possibility of more increases. The Fed's next opportunity to raise rates will arrive at its meeting in September, and Powell said policy makers want to see whether inflation does indeed continue to moderate over that time.
鈥淚t鈥檚 really dependent so much on the data, and we just don鈥檛 have it yet,鈥� Powell said.
The yield on the 10-year Treasury fell to 3.85% from 3.89% late Tuesday. It helps set rates for mortgages and other important loans.
The two-year Treasury yield, which moves more on expectations for Fed action, sank to 4.84% from 4.88%. It was above 4.91% before Powell began speaking.
In markets abroad, stocks fell more sharply in Europe. France鈥檚 CAC 40 sank 1.4%, and Germany鈥檚 DAX lost 0.5%.
In Asia, South Korea鈥檚 Kospi fell 1.7% and Japan鈥檚 Nikkei 225 was nearly flat. Stocks in China were down modestly as traders wait to see how the country's ruling Communist Party will carry out its promise to shore up The ruling party has pledged to support entrepreneurs and the struggling real estate industry but has given no details.
___
AP Business Writers Matt Ott and Joe McDonald contributed.
Stan Choe, The Associated Press
