* Indexes lose ground after Fed statement

* S&P 500 industry sectors turn red after Fed meeting

* Fed keeps rates steady, signals hikes later this year

(Updates with preliminary closing prices)

By Sinéad Carew and Sruthi Shankar

June 17 (Reuters) - The S&P 500 and Nasdaq closed down by

more than 1% on Wednesday, as traders bet that the Federal

Reserve's next move would be a rate hike after new Fed Chair

Kevin Warsh highlighted the need to tame inflation and other

policy makers projected rising interest rates later this year.

The Fed left rates unchanged as was widely expected but new

quarterly projections showed nine central bank officials expect

at least one rate hike by the end of 2026. The policy statement

removed previous language that had flagged the likelihood for

rate cuts this year.

Breaking with past practices by Fed chiefs, Warsh did not

submit an interest-rate-path projection as part of quarterly

forecasts. He told reporters the central bank would deliver on

price stability.

Policymakers had been widely expected to hold interest rates

unchanged at the 3.50%-3.75% range as they wrestled with

inflation pressures from the oil-price spike during the Iran

war. After the meeting, trader bets that rates would hold steady

by year-end had dwindled to 15.7% from 40% on Tuesday, according

to CME Group's ( CME ) FedWatch tool.

Expectations for a 25-basis-point rate hike by December were

at nearly 38% while the probability for a 50-basis-point hike

was nearly 33%.

"There was clearly a hawkish tilt to the Fed's statement and

Chair Warsh's comments at the press conference. The main

takeaway, in my opinion, is the Fed's focus on the commitment to

deliver price stability and the commentary about inflation,"

said Michael James, managing director and equity sales trader at

Rosenblatt Securities.

According to preliminary data, the S&P 500 lost 89.59

points, or 1.19%, to end at 7,421.76 points, while the Nasdaq

Composite lost 349.14 points, or 1.32%, to 26,027.21.

The Dow Jones Industrial Average fell 499.18 points, or

0.96%, to 51,494.99.

Economic data showed U.S. retail sales increased more than

expected in May, with households purchasing more cars and other

vehicles even as they paid higher prices for gasoline.

Stocks had rallied sharply from Thursday through Monday as

oil prices fell after President Donald Trump announced a

preliminary U.S.-Iran peace deal. Oil prices edged back up on

Wednesday after Trump said the agreement with Iran was not final

and that the war could resume if he is unsatisfied.

In individual stocks, CME Group ( CME ) slipped after the

exchange operator said its CEO, Terry Duffy, will step down on

March 1, and transition to the role of executive chairman.

Shares of Allbirds ( BIRD ) soared after the footwear

maker-turned-AI company changed its name to Smartbird and

appointed former Amazon executive Nadia Carlsten as

CEO.