Stocks sink after Fed appears to dash hopes of a rate cut

Stocks gave up some early gains and ended broadly lower on Wall Street Wednesday after the head of the Federal Reserve appeared to play down the possibility of an interest rate cut this year, which some investors had been hoping for.

The Fed's decision to leave its benchmark interest rate alone was widely expected and came amid signs of renewed economic health, but unusually low inflation. The announcement reaffirmed a message that has reassured investors since the start of the year: No rate hikes are likely anytime soon.

The low-rate policy is helping to keep borrowing costs down and supporting an economy that's been growing steadily since late last year.

"There really wasn't anything in the Fed statement that should have spooked investors," said Karyn Cavanaugh, senior markets strategist at Voya Investment Management, adding that a rate cut wouldn't be an appropriate move against the backdrop of the U.S. economy that grew 3.2 percent in the first three months of this year and a national unemployment rate below 4 percent.

"I don't think investors who were anticipating a rate cut were being very realistic."

The S&P 500 index fell 0.8 percent to 2,923.73. The Dow Jones Industrial Average lost 162.77 points, or 0.6 percent, to 26,430.14. The Nasdaq composite dropped 0.6 percent to 8,049.64.