Stocks: The S&P 500 (.SPX) pared declines and was last down 0.21%.
Bonds: The yield on benchmark U.S. 10-year notes (US10YT=RR) pared earlier gains and was last up 1.2 basis points to 4.616%.
Forex: The dollar index (=USD) fell and was last down 0.49% to 100.92.
Comments from market participants
Tim Holland, CIO, Orion Advisor Solutions, said the Fed left rates unchanged as expected and that the divided vote was less important than whether Middle East tensions and higher oil prices will prove transitory or feed inflation. He said the firm continues to believe strong economic fundamentals justify a cautiously optimistic outlook on U.S. equities.
Steve Kolano, chief investment officer at Integrated Partners, said the growing number of dissenters shows a shift, but that higher energy prices affect demand rather than the supply of oil. He said the base case remains to wait for more core inflation data.
Michael Rosen, chief investment officer at Angeles Investments, said the decision was expected, but unwinding shorts led to a rally in the short end of the curve while the long end sold off as inflation concerns remained. He said the dollar moved lower and equities a bit higher, though the moves were marginal.
Ryan Detrick, chief market strategist at Carson Group, said the bigger question is how much pressure the Fed will face to hike in September, noting that inflation is running hot and crude oil is surging.
Tom Porcelli, chief economist at Wells Fargo, said holding was the right call and that the Fed should have more patience given that this is supply-side inflation. He said policy will likely be driven by the inflation report to inflation report.
Matthias Scheiber, head of the multi-asset team at Allspring Global Investments, said the FOMC remains in a difficult balancing act between bringing inflation back to target and supporting activity, and that policymakers are likely to remain cautious given inflation above target and supply-side risks.
JP Powers, chief investment officer at RWA Wealth Partners, said the move was expected after June inflation showed some progress, but market expectations had built some chance of a hike. He said September now appears to be the key meeting.
Peter Cardillo, chief market economist at Spartan Capital Securities, said the statement did not change much from the previous one and that the press conference could reveal more. He said the three members seeking a hike suggest the Fed will keep talking tough on inflation.
Brian Jacobsen, chief economist at Annex Wealth Management, said it is folly to hike in the face of a supply-shock bout of inflation, though the Fed may get nervous if core inflation does not improve by September.
Charlie Wise, senior vice president of research and consulting at TransUnion, said stable rates should support measured growth in credit originations and may give consumers more confidence to borrow for larger purchases like homes and autos.
Christopher Hodge, chief U.S. economist at Natixis, said holding rates buys time until at least September and that no credibility would be sacrificed by waiting for more definitive signals. He said the Fed can remain vigilant on inflation while recognizing subdued inflation prints could justify the current stance.
Fed holds rates steady, with three dissents
NEW YORK, July 29 (Reuters) - The Federal Reserve held interest rates steady on Wednesday, a choice that may intensify questions about how U.S. central bank chief Kevin Warsh will deliver on his commitment to bring inflation back down to the 2% target.
The decision to leave the benchmark interest rate in the 3.50%-3.75% range drew dissents from three of the 12 members of the policy-setting Federal Open Market Committee who "preferred" a quarter-percentage-point hike at this meeting.
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