S&P 500 pares gains, Nasdaq turns negative after Fed hikes lending rate

US stocks pared gains on Wednesday, with the Nasdaq index turning negative, after the Federal Reserve raised interest rates but forecast fewer rate hikes for 2019.

The Federal Open Market Committee said in a statement following a two-day policy meeting that risks to the economy were "roughly balanced," but that it would "continue to monitor global economic and financial developments and assess their implications for the economic outlook."

Though the Fed now expects two rate hikes in 2019, down from three in its previous economic forecasts in September, investors said the statement was not dovish enough to calm concerns about the possible negative effects of rising rates as economic growth slackens.

A Reuters poll last week showed the probability of a US recession in the next two years jumping to 40 percent.

"This is clearly a disappointment for those hoping for a dovish rate hike," said David Joy, chief market strategist at Ameriprise Financial in Boston. "There is still a gap between where the Fed is and where the market is in terms of policy expectations for next year."

The Dow Jones Industrial Average rose 81.11 points, or 0.34 percent, to 23,756.75, the S&P 500 gained 6.7 points, or 0.26 percent, to 2,552.86 and the Nasdaq Composite dropped 10.61 points, or 0.16 percent, to 6,773.30.

Advancing issues outnumbered declining ones on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favoured decliners.

The S&P 500 posted no new 52-week highs and 51 new lows; the Nasdaq Composite recorded four new highs and 400 new lows.