US STOCKS-S&P 500, Dow finish lower in volatile trade on dour Fed forecasts

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* Fed sees growth contracting by 6.5% this year
* Indexes: Dow down 1%, S&P 500 down 0.5%, Nasdaq up 0.7%

(Updates close with details)
By Caroline Valetkevitch
June 10 (Reuters) - The Dow and S&P 500 ended a choppy
session lower on Wednesday after the Federal Reserve reassured
investors of its support for the economy but projected a 6.5%
decline in gross domestic product this year.
The Nasdaq, helped by gains in Microsoft MSFT.O and Apple
AAPL.O , managed to hold onto a good chunk of its gains and
registered a closing record high for a third straight session.
In its latest policy statement, the Fed also forecast a 9.3%
unemployment rate at year's end, and officials saw the key
overnight interest rate, or federal funds rate, remaining near
zero through at least 2022. The S&P 500 and Dow both moved between gains and losses
after the statement, which included the Fed's first projections
on the economy since the coronavirus outbreak, and following
comments from Fed Chairman Jerome Powell.
"The projections for GDP and for unemployment are that it's
going to improve slowly from here, but it still takes a while to
get back," said Tom Martin, senior portfolio manager at Globalt
in Atlanta.
An S&P index of bank shares .SPXBK , which tend to benefit
from rising rates, fell 5.8% in its biggest daily percentage
decline since April 15, and the S&P 500 financial index .SPSY
was the biggest drag on the benchmark index.
The Dow Jones Industrial Average .DJI fell 282.31 points,
or 1.04%, to 26,989.99, the S&P 500 .SPX lost 17.04 points, or
0.53%, to 3,190.14 and the Nasdaq Composite .IXIC added 66.59
points, or 0.67%, to 10,020.35.
The S&P 500 was off as much as 0.8% before the Fed statement.
The Fed's pledge to keep monetary policy loose until the U.S.
economy is back on track repeats a promise made early in the
central bank's response to the coronavirus pandemic.
"I noticed a material downward move in the banks as (Powell)
talked about yield curve control. That is not something the
banks want to see. What it does is it keeps rates down," said
Quincy Krosby, chief market strategist at Prudential Financial
in Newark, New Jersey.
Shares of Eli Lilly and Co LLY.N rose late, ending up
1.3%, after its chief scientist told Reuters that it could have
a drug specifically designed to treat COVID-19 authorized for
use as early as September if all goes well with either of two
antibody therapies it is testing.
Declining issues outnumbered advancing ones on the NYSE by a
2.25-to-1 ratio; on Nasdaq, a 1.86-to-1 ratio favored decliners.
The S&P 500 posted 17 new 52-week highs and no new lows; the
Nasdaq Composite recorded 92 new highs and three new lows.
Volume on U.S. exchanges was 14.13 billion shares, compared
to the 12.69 billion average for the full session over the last
20 trading days.