Stocks finish flat

Fed's decision to keep rates steady was widely expected, and doesn't do much to rally an inflation weary market.

NEW YORK (CNNMoney.com) -- Stocks bounced around a bit Thursday, ultimately finishing flat, after the Federal Reserve held interest rates steady but indicated it was still concerned about inflation.

The Dow Jones industrial average (down 5.45 to 13,422.28, Charts) and the broader S&P 500 (down 0.63 to 1,505.71, Charts) were both virtually unchanged, according to early tallies. The tech-heavy Nasdaq (up 3.02 to 2,608.37, Charts) gained about 0.1 percent.

In its policy statement, the Fed kept its target for the fed funds rate, an overnight lending rate for banks, steady 5.25 percent, where it has stayed since August 2006.

Fed holds rates steady again

The Fed dropped the word "elevated" from its description of core inflation, but added that "sustained moderation in inflation pressures has yet to be convincingly demonstrated."

"It might be a little less hawkish than last time around," said Peter Cardillo, chief market economist at Avalon Partners. "But is inflation still on the minds of the Fed? Indeed."

Treasury bonds edged lower on the news, pushing the yield on the benchmark 10-year note to 5.10 percent from 5.08 percent late Wednesday. Bond prices and yields move in opposite directions.

Oil closed higher, and the dollar rose against the euro and yen.

Here's what else moved markets Thursday:

The Fed's moves, while not a surprise, were nonetheless closely watched by investors since inflation and rate hike fears have rattled markets in recent weeks, helping to push the 10-year note yield to a 5-year high earlier this month.

Investors dislike rising interest rates since they make borrowing more expensive, eating into corporate profits.

Stocks traded flat for most of the morning, with investors awaiting the Fed's decision and largely ignoring a reading on first-quarter economic growth.

Before the opening bell, the Commerce Department released its final revision of first-quarter economic growth, which showed the nation's economy grew at a slightly faster pace in the first quarter than previous estimates. But the reading missed forecasts and also included showed a slight pickup in a key inflation reading.

In corporate news, troubled U.S. automaker General Motors agreed to sell its Allison transmission unit to private-equity firms Carlyle Group and Onex for $5.6 billion. GM (up $0.74 to $38.15, Charts, Fortune 500) shares jumped over 2 percent.

Builder KB Home (down $0.54 to $39.89, Charts, Fortune 500) reported an unexpected quarterly net loss of $1.93 a share as revenue tumbled due to the weak housing market. KB shares lost about 1 percent.

And Capital One Financial (up $0.87 to $79.67, Charts, Fortune 500), the credit card issuer and banking company, said after the closing bell Wednesday that it plans to cut about 2,000 jobs, or 6 percent of its work force, as it struggles with mortgage banking losses and higher credit costs. Its shares rose over 1 percent.

Oil prices rose. U.S. light crude gained 60 cents to settle at $69.57 a barrel on the New York Mercantile Exchange.

The dollar rose slightly against the euro and yen.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 3 to 2 on volume of 1.12 billion shares. On the Nasdaq, advancers topped decliners by a narrow margin as 1.54 billion shares changed hands.