US stocks have ended lower and the S&P 500 has snapped a three-day streak of record high closes with Federal Reserve chairman Jerome Powell appearing to dampen hopes of an interest rate cut later this year. In its policy announcement, the Fed held rates steady on Wednesday as expected and struck a cautious tone on inflation. But Powell, speaking following the Fed statement, said a decline in inflation this year could be due to transitory factors.

That seemed to throw cold water on views by some in the market that the Fed might make a pre-emptive bid to head off lower inflation or a recession by cutting rates. As Powell spoke, traders of US short-term interest rate futures began trimming bets the Fed will cut rates before the end of the year. Stocks had been higher for much of the session and the S&P 500 hit an intraday record early, driven by a jump in shares of Apple.

The company late on Tuesday reported quarterly results that beat Wall Street estimates despite a record drop in iPhone revenue. It also announced plans for a new $US75 billion ($107 billion) share buyback and raised its cash dividend by 5 per cent. Apple’s stock ended up 4.9 per cent.

The Dow Jones Industrial Average fell 162.77 points, or 0.61 per cent, to 26,430.14, the S&P 500 lost 22.1 points, or 0.75 per cent, to 2,923.73 and the Nasdaq Composite dropped 45.75 points, or 0.57 per cent, to 8,049.64. Selling was broad-based as nearly every S&P 500 sector ended the day lower.