NEW YORK (Reuters) - The S&P 500 and the Dow reversed losses to close higher on Wednesday and U.S. Treasury yields slipped after remarks by Federal Reserve Chair Jerome Powell tempered the market’s initial reaction to the U.S. central bank’s policy statement.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 18, 2019. REUTERS/Brendan McDermid

All three major U.S. stock indexes initially extended earlier losses following the release of the Fed’s policy decision after the close of a two-day meeting, which dimmed hopes for further rate cuts and fell short of the more aggressive reduction in borrowing costs that President Donald Trump had demanded.

The U.S. central bank, on a 7-3 vote, lowered the Fed funds target rate to a range of 1.75% to 2.00% “in light of the implications of global developments for the economic outlook as well as muted inflation pressures,” although it said the U.S. economy continues to grow at a “moderate” pace and the labor market “remains strong.”

But stocks reversed their slide during Powell’s news conference following the policy decision, during which he said the Fed is closely monitoring economic data, trade and global growth risks, but did not see imminent recession, or think the central bank would cut rates to negative territory.

“This type of reaction we see almost every time from the Fed decisions,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. “The first move is from the people who think it’s not enough, and at the end of the day people conclude that they did exactly what investors expected them to do. Those people who got what they expected used the selloff to buy, and I think that’s what happened here.”

The Dow Jones Industrial Average rose 36.28 points, or 0.13%, to 27,147.08, the S&P 500 gained 1.03 points, or 0.03%, to 3,006.73, and the Nasdaq Composite dropped 8.62 points, or 0.11%, to 8,177.39.

The MSCI world equity index, which tracks shares in 47 countries, fell 0.06%.

U.S. Treasury yields dipped following Powell’s remarks.

Benchmark 10-year notes last rose 7/32 in price to yield 1.7909%, from 1.814% late on Tuesday. The 30-year bond last rose 23/32 in price to yield 2.2471%, from 2.28% late on Tuesday.

The dollar strengthened following the Fed’s rate cut. The dollar index rose 0.28%, with the euro down 0.36% to $1.1031.

The Japanese yen weakened 0.26% versus the greenback at 108.44 per dollar, while sterling was last trading at $1.2483, down 0.14% on the day.

Oil prices edged lower after Saudi Arabia said it would quickly restore full production following last week’s attack on its facilities and as U.S. crude stockpiles unexpectedly increased.

Tension in the Middle East remained elevated, however. Saudi Arabia on Wednesday displayed remnants of what it described as Iranian drones and cruise missiles used in the attack, calling them “undeniable” evidence of Iranian aggression. Trump ordered a major increase in sanctions on Iran on Wednesday, following repeated U.S. assertions that Iran was behind the attack.

U.S. crude oil futures settled down 2.07% at $58.11 per barrel, while Brent crude oil futures settled at $63.60 per barrel, a 1.47% decline.

Spot gold reversed early gains after the Fed released its statement. Spot gold dropped 0.6% to $1,492.81 an ounce.

Copper lost 0.27% to $5,805.00 a tonne.