Stocks closed little changed on Wednesday after the Federal Reserve failed to signal it will cut rates again in 2019, disappointing traders.
The S&P 500 ended the day just above the flatline at 3,006.73. The Dow Jones Industrial Average rose just 36.28 points, or 0.1% to 27,147.08. The Nasdaq Composite closed 0.1% lower at 8,177.39. The S&P 500 and Nasdaq fell as much as 0.% and 1.2%, respectively. The Dow briefly fell 211.65 points, or 0.8%.
"I think the market got into its head it wanted more rate cuts," said Drew Matus, chief market strategist at MetLife Investment Management. "Market participants and economists are seeing two different things."
"If [the Fed] really wanted to convince people these are insurance cuts, then they're done. They're done this year," Matus said.
The U.S. central bank cut the overnight rate by 25 basis points to a range of 1.75% to 2%, as was widely expected. This is the second time this year the Fed has lowered rates.
"What the Fed's telling you is this is risk management. They want to bring down rates a little bit but they ultimately see the economy as being in good shape," said Gregory Faranello, head of U.S. rates at AmeriVet Securities.
However, the Fed was divided in its decision to lower rates, with three officials dissenting. Central bank officials are also split on further action this year.
Five Fed members wanted to keep rates unchanged while five others supported lowering them to the current range and keeping them there. Seven others wanted at least one more rate cut.
Treasury yields pared their losses from earlier in the day. The benchmark 10-year rate traded at 1.78% while the 2-year yield was at 1.75%.
The Fed meeting took place a couple of days after President Donald Trump called the central bank "boneheads" and asked for zero or even negative rates. Trump tweeted on Wednesday that Powell and the Fed have "no guts, no sense, no vision."
The meeting also happened as China and the U.S. try to reach a deal to end their ongoing trade war.
Trump said on Wednesday that a deal could come soon. China and the U.S. are expected to meet next month. The trade war has dampened the outlook for global economic growth and corporate profit expansion.
FedEx slashed its fiscal 2020 earnings guidance. The company also posted weaker-than-expected quarterly results, citing "a weakening global macro environment driven by increasing trade tensions." FedEx shares dropped 13.8%.
"It's going to take some sort of catalyst for the markets to move higher," said Greg Luken, CEO of Luken Investment Analytics. "That will be earnings." He noted that lower interest rates could give stocks a short-term boost, but strong earnings will be needed to keep the market moving higher.
The major indexes are within striking distance of record set in July. The Dow and S&P 500 were about 1% from their all-time highs. The Nasdaq was 2.2% below its record.
Energy shares fell broadly after Trump told Treasury Secretary to "substantially increase" sanctions on Iran after a series of attacks targeting Saudi Arabia's oil production. The Energy Select Sector SPDR ETF (XLE) dropped 0.5%. Crude futures fell 2.2%.
—CNBC's Silvia Amaro and Patti Domm contributed to this report.