The Nasdaq rose slightly with a boost from chip stocks while the S&P 500 closed virtually unchanged on Wednesday as investor reactions were muted after the US Federal Reserve kept interest rates unchanged as expected and gave little indication when borrowing costs might fall again.

In its statement, the Fed cited still-elevated inflation alongside solid economic growth for its decision. The US central bank said the job market has "shown some signs of stabilisation" and removed language from its prior statement saying that downside risks to employment had risen.

Investors had widely expected the central bank to keep rates unchanged at 3.5 percent - 3.75 percent and it said that eight out of 10 policymakers had voted to hold rates steady. After the statement, traders boosted their bets that the Fed would cut short-term borrowing costs in June – but not before then.

And in his closely monitored press conference, Fed Chair Jerome Powell was careful not to comment on future rate decisions, saying that ⁠the Fed would be data-dependent, but he told reporters that the upside risks to inflation and downside risks to employment have diminished.

"Whether you were bullish or bearish going into the press conference you walked away feeling about the same," said Michael James, equity sales trader at Rosenblatt Securities.

"Employment and inflation risks have downsized, but inflation overall remains stubborn. There hasn't been a meaningful enough change in the employment market to warrant the Fed doing something.

There hasn't been a meaningful enough improvement in inflation to allow the Fed to be more aggressive with further cuts," James added.

The S&P 500 edged down 0.1 percent, to 6,978, the Dow was barely moved at 49,015, while the Nasdaq rose 0.2 percent, to 23,857. (Reuters)