The S&P 500 ended flat Wednesday after a volatile session in which the U.S. central bank left interest rates unchanged as expected, and Federal Reserve Chair Jerome Powell said monetary policy still needs to impose some restraint on the economy.

Powell said that Fed policymakers expect inflation in goods prices to go up over the course of the summer as the impact of President Donald Trump's tariffs work their way to U.S. consumers.

Earlier, the Fed statement signaled borrowing costs were still likely to fall this year, but slowed the overall pace of expected future rate cuts.

While policymakers still anticipate cutting rates by half a percentage point this year, they slightly slowed the expected pace from there to a single quarter-percentage-point cut in each of 2026 and 2027.

After Powell spoke, U.S. Treasury yields pared most of their earlier drop.

"The market might be taking its cue from the fact yields have turned around. (Powell) made it quite clear he's not going to change monetary policy until they are sure of the tariffs' effect on inflation, and he stressed that many times," said Peter Cardillo, chief market economist at Spartan Capital Securities.

Investors also have been closely watching developments in the Middle East, with some concerned about the possibility of a more direct U.S. military involvement in the Israel-Iran aerial war.

Iranian Supreme Leader Ayatollah Ali Khamenei rejected Trump's demand for unconditional surrender. Trump said his patience had run out, though he gave no clue about what his next step would be.

According to preliminary data, the S&P 500 lost 2.37 points, or 0.04%, to end at 5,980.35 points, while the Nasdaq Composite gained 23.66 points, or 0.12%, to 19,544.75. The Dow Jones Industrial Average fell 43.83 points, or 0.10%, to 42,171.97.

Stocks were solidly higher before the Fed statement.

Earlier in the day, initial jobless claims data showed the number of Americans filing new applications for unemployment benefits fell last week, but stayed at levels consistent with a further loss of labor market momentum in June.

• Powell: Tariff-Driven Price Hikes Likely in Coming Months
• Fed Sees Two Rate Cuts in 2025, Keeps Rate Steady