By Sinead Carew
NEW YORK -- U.S. stocks ended Wednesday's session lower, driven by a sharp decline in the S&P 500 energy sector, after the Federal Reserve said the domestic economy was growing at a solid pace, signaling it remains on track to raise interest rates later this year.
Concluding their first policy-setting meeting of the year, Fed officials said they would be "patient" on raising rates as they looked past the urgent moves made by other central banks this month to boost their struggling economies.
The dollar strengthened further after the Fed statement, putting renewed pressure on oil, which fell to its lowest level since early 2009. This pushed energy stocks down further.
%VIRTUAL-WSSCourseInline-975%While many market participants said they were unsurprised by the Fed comments, Stephen Massocca, chief investment officer at Wedbush Equity Management in San Francisco said the Fed's language looked slightly stronger in support of a rate hike.
"It was more hawkish than people thought. But you are counting grains of sand coming through the hourglass so I don't think you will see it resonate much longer than what we've seen in the last hour or so," Massocca said.
"I don't think anyone is going to overreact here, but it was a surprising to me. I thought they would turn the dial 2 degrees and they turned it 6 degrees," he said.
Bond prices rose after the statement, which may also have put some pressure on stocks.
The Dow Jones industrial average (^DJI) fell 195.84 points, or 1.13 percent, to 17,191.37, the Standard & Poor's 500 index (^GPSC) lost 27.39 points, or 1.35 percent, to 2,002.16 and the Nasdaq composite (^IXIC) dropped 43.50 points, or 0.93 percent, to 4,637.99.
The S&P energy sector finished down 3.9 percent as U.S. crude futures tumbled more than 4 percent to $44.31 a barrel. Barclays (BCS) and Goldman Sachs (GS) posted bearish notes on oil earlier in the day.
"Today's statement makes it apparent that they are less convinced that the core can stay insulated from the drop in oil prices," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. "Now, September is when I think the Fed will lift rates off zero."
The market had been boosted earlier by earnings from companies including Apple and Boeing.
A 5.7 percent advance in Apple (AAPL) shares limited losses on the Nasdaq. Apple smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season, which helped the company post the largest quarterly profit in corporate history.
Boeing (BA) added 5.4 percent after handily beating top- and bottom-line expectations.
NYSE decliners outnumbered advancers 2,284 to 825, for a 2.77-to-1 ratio; on the Nasdaq, 2,077 issues fell and 665 advanced for a 3.12-to-1 ratio.
The S&P 500 posted 58 new 52-week highs and 14 lows; the Nasdaq composite recorded 72 new highs and 71 lows.
Volume was heavier, with about 7.6 billion shares traded on U.S. exchanges, above the 7.16 billion average for the month so far, according to BATS Global Markets.
-With additional reporting by Ryan Vlastelica, Rodrigo Campos, Chuck Mikolajczak and Richard Leong.
What to watch Thursday:
The Labor Department reports weekly jobless claims at 8:30 a.m. Eastern time.
The National Association of Realtors releases the pending homes sales index at 10 a.m.
These selected companies are scheduled to release quarterly financial results:
Abbott Laboratories (ABT)
Alibaba Group (BABA)
Ally Financial (ALLY)
Cardinal Health (CAH)
Deutsche Bank (DB)
Dow Chemical (DOW)
Ford Motor (F)
Hershey Co. (HSH)
JetBlue Airways (JBLU)
Kate Spade (KATE)
L-3 Communications (LLL)
Northrop Grumman (NOC)
Occidental Petroleum (OXY)
Robert Half International (RHI)
Rogers Communication (RCI)
Royal Caribbean Cruises (RCL)
Stanley Black & Decker (SWK)
Nasdaq OMX Group (NDAQ)
Time Warner Cable (TWC)
Valero Energy (VLO)