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By Noel Randewich

The S&P 500 and the Nasdaq trimmed earlier losses on Wednesday after the Fed kept interest rates steady, as expected, and said it would continue to keep its rate close to zero.

In its statement following its two-day policy meeting, the Federal Reserve projected a rapid jump in U.S. economic growth and inflation this year as the COVID-19 crisis winds down, and repeated its pledge to keep its target interest rate near zero for years to come.

A $1.9 trillion spending stimulus and the rollout of vaccines have fueled a rotation into so-called value stocks that are viewed as likely to outperform as the economy recovers from the coronavirus pandemic.

At the same time, worries that the stimulus could overheat the economy and lead to higher inflation rates have triggered a strong rise in long-duration Treasury yields and made technology and other growth stocks less attractive.

Following the Fed's statement, the Dow Jones Industrial Average was up 0.49% at 32,985.82 points, while the S&P 500 was down 0.10% at 3,958.59.

The Nasdaq Composite dropped 0.55% to 13,397.28.

The S&P 500 and the Dow on Monday reached all-time closing highs while the Nasdaq has recovered more than half of its losses following a selloff in late February and early March.

Fast-food retailer McDonald's Corp gained 1.7% after Deutsche Bank raised its target price on the stock and also upgraded its recommendation to "buy" from "hold."

(Reporting by Noel Randewich in Oakland, Calif.; Additional reporting by Shashank Nayar and Medha Singh in Bengaluru; Editing by Matthew Lewis)