U.S. stocks closed well off earlier highs after a choppy session on Wednesday, as Federal Reserve Chair Jerome Powell chilled expectations the central bank might be poised to cut rates at its September meeting.

In keeping rates unchanged, as was widely expected, the central bank said "the unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated," in a split decision that saw two governors dissent.

Stocks were modestly higher before the Fed statement as investors assessed the first reading of second-quarter economic growth, which was stronger than expected, but underlying details indicated an economy that was likely losing strength.

However, stocks retreated after Powell said it was too soon to say whether the central bank would cut rates at its next meeting in September and noted that current policy was modestly restrictive but has not been holding back the economy.

"There wasn't too much of a change in the statement here, still showing concerns about how these tariff policies will come through and probably yet to rely on the data that's come through, you can see that just in the GDP report, how much noise is going on in each of these releases right now," said JP Powers, chief investment officer at RWA Wealth Partners in Boston.

"If I were Powell, I don't know how much he thinks about his legacy, but I think he's going to err on the side of probably being too late to cut rates here on his way out rather than risk any flare-up just as he's heading off into the sunset."

According to preliminary data, the S&P 500 lost 6.03 points, or 0.09%, to end at 6,364.83 points, while the Nasdaq Composite gained 37.30 points, or 0.18%, to 21,135.59. The Dow Jones Industrial Average fell 160.08 points, or 0.36%, to 44,472.91.

After market expectations for a September rate cut climbed to about 68% after the Fed statement, they fell below 50% after Powell's comments, according to the LSEG data.

Earlier data in the ADP employment report showed private payrolls grew by 104,000 in July, topping forecasts of 75,000, the latest in a string of labor market data this week before Friday's government payrolls report.

Investors were also awaiting earnings from several megacap companies this week, with Microsoft and Meta Platforms scheduled to report their results after the market close, while Amazon and Apple are due to report on Thursday. The recent batch of corporate earnings initially helped buoy equities, with Teradyne surging as the best performer on the S&P 500 after its quarterly results.

Solid earnings from a host of consumer-facing names also put the resilience of shoppers on display.

Starbucks posted better-than-expected third-quarter sales, while Hershey reported results that topped forecasts. VF Corp, parent of Vans, and Kraft Heinz both beat quarterly revenue estimates.

Still, the tariff overhang remained, as U.S. President Donald Trump signed an executive order implementing an additional 40% tariff on Brazil, bringing the total tariff amount to 50% and including orange juice, some aircraft, wood pulp and energy products.

The tariffs excluded base metals and weighed heavily on the S&P 500 materials sector, as Freeport-McMoRan shares tumbled.