* Fed leaves interest rate unchanged

* Earnings from Meta, Microsoft ( MSFT ) on tap after the bell

* Ford rises after lifting FY profit outlook

(Updates with market close)

By Noel Randewich

July 29 (Reuters) - Wall Street ended sharply lower on

Wednesday after the Federal Reserve held interest rates steady,

with AI-related chip stocks adding to recent declines ahead of

quarterly reports from Microsoft ( MSFT ) and Meta Platforms ( META ).

The Fed's widely expected decision to leave the benchmark

interest rate in the 3.50%-3.75% range drew dissents from three

of the 12 members of the policy-setting Federal Open Market

Committee who "preferred" a quarter-percentage-point hike at

this meeting.

The benchmark S&P 500 hit its lowest level in a

month, while the tech-heavy Nasdaq was down about 9%

from its June record high.

Investors had mostly expected the Fed to keep rates

unchanged. Inflation has been running above the central bank's

target for more than five years, and up until last month it was

accelerating as the war in the Middle East pushed up global fuel

and food prices.

"The Fed held pat, as expected. The bigger question now

though becomes, how much pressure will they have to hike in

September? Inflation is running hot and with surging crude oil,

the market expects the next hike to indeed be in September,"

said Ryan Detrick, chief market strategist at Carson Group.

Microsoft ( MSFT ) and Meta Platforms ( META ) are set to

report quarterly results after the bell. Their shares are down

in 2026 as investors question the sustainability of their AI

spending boom.

Investors worry that major U.S. companies are deepening a

web of AI-linked investments and continuing to funnel billions

into the emerging technology at the expense of free cash flow.

Meanwhile, competition from China has been heating up, both in

the race to develop advanced chips and as Chinese firms roll out

cheaper AI models.

Speaking to reporters, Fed chief Kevin Warsh said spending

on AI was laying the groundwork for future growth.

AI-related chipmakers added to recent losses after a sixfold

jump in SK Hynix's ( SKHY ) quarterly profit fell short of

lofty investor expectations. The South Korean company's shares

fell 10%.

AI infrastructure company Vertiv ( VRT ) slumped after

missing quarterly revenue expectations.

According to preliminary data, the S&P 500

lost 111.36 points, or 1.50%, to end at 7,317.42 points,

while the Nasdaq Composite lost 420.02 points, or 1.68%,

to 24,460.08. The Dow Jones Industrial Average

fell 1,129.03 points, or 2.14%, to 51,618.29.

Analysts on average expect S&P 500 aggregate second-quarter

earnings to jump 40% from a year ago, with AI-related stocks

accounting for much of that growth, according to LSEG I/B/E/S.

Strong earnings forecasts and Wall Street's recent decline

have left the S&P 500 trading at about 20 times expected

earnings, just above its 10-year average of 19, according to

LSEG data.

Ford Motor ( F ) gained after raising its annual profit

outlook for a second time this year. Lennox tumbled

after the HVAC solutions maker lowered its annual profit

forecast.

Visa rose after the company beat estimates for

quarterly profit, helped by World Cup-fueled travel demand.