The Dow Jones Industrial Average dropped 0.6 percent to 26,430.14.
The broad-based S&P 500 tumbled 0.8 percent to 2,923.73, ending a three-day streak of new records, while the tech-rich Nasdaq Composite Index shed 0.6 percent to 8,049.64.
The Fed, as expected kept interest rates unchanged, describing the labor market as"strong," while highlighting a slowdown in investment by businesses and households and inflation.Economic gloom hits world stock markets But stocks began pulling back after Fed Chair Jerome Powell said in a news conference that low inflation appeared"to be transient or idiosyncratic," a comment that analysts said suggested the US central bank would not soon cut interest rates.
Earlier, US private-sector hiring surged by 275,000 new positions in April -- beating the consensus forecast by more than 100,000 -- driven by a huge increase in the dominant services sector, payroll services firm ADP reported.Meanwhile, an industrial survey showed activity in US manufacturing had hit its slowest pace in more than two years last month on falling production and weaker demand.
Tech giant Apple surged 4.9 percent as it reported better-than-expected quarterly results with gains in services helping to offsetOther companies with gains after earnings included food company Mondelez, which rose 1.6 percent, Hilton Worldwide, up 6.5 percent, and CVS Health, up 5.4 percent.
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