January 31, 2018 / 8:22 PM / 3 months ago

US STOCKS-Wall St loses gains after Fed sees inflation rising

* Stocks give up earlier gains on Fed statement

* Fed sees inflation rising, holds rate steady

* Boeing jumps to record after a strong forecast

* Private payrolls growth better than expected in Jan - ADP

* Dow up 0.07 pct, S&P down 0.18 pct, Nasdaq down 0.09 pct (Updates to late afternoon, changes byline)

By Stephen Culp

Jan 31 (Reuters) - U.S. stocks gave up earlier gains to trade lower on Wednesday after the Federal Reserve said it sees inflation rising this year, signaling it remains on track to boost interest rates again in March.

The Fed kept rates unchanged but, in a statement following its two-day policy meeting, it repeated that it expected that “further gradual” rate hikes will be warranted.

“They’re more confident in their expectations of rising inflation,” said Kevin Logan, Chief U.S. Economist at HSBC Securities in New York.

The central bank raised rates three times last year and sees three more hikes in 2018 even as it continues to trim its balance sheet on a largely pre-set schedule.

“The Fed’s acknowledgment of the quickening pace of inflation today put three hikes in 2018 into the ‘base-case’ and perhaps raises the prospects for a fourth,” said Mike Terwilliger, portfolio manager, Resource Credit Income Fund.

In another sign of a strong economy, the ADP national employment report released on Wednesday showed 234,000 private sector jobs were added in January compared with 185,000 expected by analysts. The report was published ahead of the more comprehensive report from the U.S. Labor Department on Friday.

At 2:56 p.m. ET, the Dow Jones Industrial Average rose 17.38 points, or 0.07 percent, to 26,094.27, the S&P 500 lost 5.09 points, or 0.18 percent, to 2,817.34 and the Nasdaq Composite dropped 6.86 points, or 0.09 percent, to 7,395.62.

Stocks had been higher earlier Wednesday, lifted by a surge in Boeing which forecast better-than-expected full-year profits and said it expects to deliver a record number of commercial aircraft in 2018, sending its shares up 4.6 percent.

The aerospace giant was the biggest percentage gainer on the Dow, helping pull the blue-chip index out of its biggest two-day plunge since September 2016.

The selloff earlier in the week had been prompted by an increase in U.S. Treasury yields to multi-year highs on expectations that world central banks will ease away from stimulus.

Among the S&P 500’s 11 major sectors, technology gave the biggest boost to the index as investors look to Facebook and Microsoft earnings, due after markets close.

Healthcare stocks continued to weigh on the three major U.S. indexes following a report on Tuesday that Amazon.com, Berkshire Hathaway and JPMorgan Chase were joining forces to cut healthcare costs for its U.S. employees. The S&P 500 healthcare index was down 1.6 percent.

Analysts expect fourth-quarter S&P 500 earnings growth of 13.7 percent, up from 12 percent expected at the start of the month. So far, 37 percent of companies in the index have reported and 80.5 percent of them have come in above consensus estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.68-to-1 ratio favored decliners.

The S&P 500 posted 33 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 79 new highs and 45 new lows. (Reporting by Stephen Culp; Editing by Nick Zieminski)

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