US STOCKS-S&P 500 dips slightly after Fed keeps rates steady as expected

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Fed keeps rates steady, cites stabilizing jobs market, high inflation

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Traders still bet first rate cut will be in June

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Texas Instruments (TXN), AT&T (T), Seagate (STX) shares rally after quarterly updates

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Investors wait for Mag 7 earnings

(Updates with preliminary closing data)

By Sin?ad Carew and Pranav Kashyap

Jan 28 (Reuters) - The S&P 500 closed slightly lower and the Nasdaq advanced modestly on Wednesday as investor reactions were muted after the 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 U.S. central bank said the job market has "shown some ?signs of stabilization" 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%-3.75% 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.

According to preliminary data, the S&P 500 lost 0.73 points, or 0.01%, to end at 6,977.87 points, while the Nasdaq Composite gained 40.73 points, or 0.17%, to 23,857.83. The Dow Jones Industrial Average rose 12.55 points, or 0.03%, to 49,015.96.

The benchmark index had briefly topped the 7,000 points milestone for the first time earlier in the day.

Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, said the Fed's decision "shows they are more comfortable ?with the ?economy. It certainly won't satisfy the White House, but the White House is never satisfied."

'MAG 7' KICKS OFF EARNINGS

Besides watching out for the Fed update, investors have also been waiting for a wave of Big Tech earnings ?due out after the market close. Meta, Microsoft (MSFT) and Tesla report after market close, kicking off the so-called "Magnificent Seven" earnings that have driven the AI trade, powering markets to record levels. Bellwether IBM (IBM) is also due to report after the close.

With lofty valuations driving rotation into undervalued areas of the market, the group's capital plans will be closely watched as investors question whether AI spending will drive returns.

Reports from Tuesday evening and Wednesday morning have attracted some investor enthusiasm. Texas Instruments (TXN) shares rallied after the analog chipmaker forecast first-quarter revenue and profit above Wall Street estimates. Shares in AT&T (T) rose ?after the U.S. carrier projected annual profit above market expectations.

In industrials however, Textron (TXT) shares sank after it guided for a fiscal profit below estimates, while Otis stock slipped after its fourth-quarter revenue missed expectations.

Seagate Technology (STX) shares jumped 20% after it forecast third-quarter revenue and profit above Wall Street expectations and its rival Western Digital (WDC) also rallied.

(Reporting ?by Sin?ad Carew, Caroline Valetkevitch in New York, Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Krishna Chandra Eluriu and Aurora Ellis)