US STOCKS-Wall Street extends losses as Fed holds rates steady

Updates to after Fed announcement

By Caroline Valetkevitch

NEW YORK, Jan 29 (Reuters) - U.S. stocks added to losses on Wednesday, with the Nasdaq down more than 1%, after the Federal Reserve held interest rates steady and gave little insight into when further reductions in borrowing costs may take place.

Stocks were lower before the announcement, with tech heavyweights, including Nvidia NVDA.O and Microsoft MSFT.O leading the way down.

The Fed on Wednesday also dropped from its latest policy statement language saying that inflation "has made progress" towards the Fed's 2% inflation goal.

The decision to hold the policy rate steady was widely anticipated following three consecutive rate cuts in 2024 that reduced the Fed's benchmark rate by a full percentage point.

Investors have been anxious for clues on the Fed's next move on rates.

"We think the likely window for any future rate reductions won't open before May, and we expect the Federal Reserve (Fed) to cut twice this year," said Matthias Scheiber, head of the multi-asset solutions team at Allspring Global Investments in London.

The Dow Jones Industrial Average .DJI fell 222.09 points, or 0.49%, to 44,630.22, the S&P 500 .SPX lost 49.52 points, or 0.80%, to 6,018.99 and the Nasdaq Composite .IXIC lost 221.33 points, or 1.12%, to 19,512.25.

Nvidia was last down 6%, while Microsoft was down 1.1%. Nvidia led a tech selloff on Monday after Chinese startup DeepSeek launched AI models it said were cost-effective and ran on less advanced chips compared to OpenAI.

Quarterly results from Microsoft, Facebook-parent Meta META.O and Tesla TSLA.O are expected after the bell.