U.S. stocks closed lower after the Federal Reserve left interest rates unchanged and took a less confident view on inflation, and chip darling Nvidia renewed its slide on a report President Donald Trump's considering restricting the company's sales to China.

Nearly everyone expected the Fed to keep interest rates steady, but the Fed dropped in its statement reference to inflation making “progress” toward its 2% objective. It simply noted that inflation remained “somewhat elevated."

Paul Ashworth, Capital Economics chief North America economist still forecasts a rate cut in March, but "that will require a big downward benchmark revision to payrolls and a muted inflation out-turn in January. If the Fed doesn’t resume cutting in the next few months, however, we suspect the window will have closed."

The broad S&P 500 index ended down 0.47%, or 28.39 points, to 6,039.31; the blue-chip Dow fell 0.31%, or 137.08 points, to 44,713.27; and the tech-laden Nasdaq dropped 0.51%, or 101.26 points, to 19,632.32. The benchmark 10-year Treasury yield dropped to 4.547%.

Oil shed 1.21% to $72.88 per barrel after a weekly U.S crude oil inventories report showed a larger-than-expected stockpile.

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With rates on hold, investors turn to company news and earnings to determine stock market direction, and "so far, so good. It’s a good start to the earnings season," said Gina Bolvin, president of Bolvin Wealth Management Group.

Mega-cap tech stocks in focus

After-hours earnings will provide the market with direction, analysts say, when investors hear the first round of earnings from the so-called Magnificent Seven. The "Mag-7" stocks are mega-cap technology companies that have significant weighting in major stock indexes and have led much of the rally in stocks the past few years. They are Apple, Microsoft, Amazon, Alphabet (Google), Tesla, Meta (Facebook), and Nvidia.

Tesla, Meta Platforms, Microsoft and IBM are due out with earnings after Wedneday's close. After the shakedown DeepSeek AI gave the tech sector on Monday, investors will be eager to hear what those company executives will have to say on their respective earnings conference calls.

Semiconductor company Nvidia, which was hit hard by DeepSeek's less costly AI model, slumped again on Wednesday after Bloomberg reported that Trump administration officials have discussed curbing the company's chip sales to China. Shares closed down 4.1%, tallying a more than 10% loss for the week so far.

"The entire market will have a much clearer perspective on the ramifications of this DeepSeek disruption," said Mike O'Rourke, chief market strategist at JonesTrading. "There is little doubt that the companies will place the best possible spin that they can on events, but if they are still spending massively on capital expenditures, it should create some alarm."

Those earnings, so far, were:

• Tesla reported results from the last three months of the year that missed Wall Street estimates. Shares dropped more than 3% in after-hours trading.
• Microsoft topped second-quarter earnings estimates but sales growth of Azure cloud computing services was slower than analysts' forecasts. Microsoft stock was down nearly 4% in after-hours activity.
• Meta topped earnings expectations for the last three months of the year, but the company's sales outlook for the first three months of 2025 were slightly softer than expected. Shares were up about 1% in after-hours trading.

Follow the Fed decision:Fed meeting live updates: What to expect from Fed decision on interest rates

Other corporate earnings

Other companies, aside from mega-cap tech, also reported earnings on Wednesday. They include:

• ASML shares soared more than 4% after the Dutch semiconductor company said orders in the latest quarter topped analysts' expectations.
• Danaher reported earnings that fell short of analyst estimates, and said revenue may fall in the current three-month quarter. Shares of the manufacturing company fell almost 10%.
• T-mobile's quarterly earnings beat expectations. The wireless carrier's shares gained more than 6%.
•  F5 software company upgraded its full-year earnings outlook. Its shares jumped 11.4%.

Trump Media & Technology Group Corp closed up more than 6.5% after the company said it's expanding into financial services, including investment vehicles.

Bitcoin

Bitcoin rose early Wednesday but is stuck mostly in a range as investors continue to wait for Trump to make good on his pledge to create a Bitcoing strategic reserve.

The cryptocurrency was last up 2.79% at $104,175.00.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and  subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.