The Dow Jones Industrial Average declined 164.55 points, or 0.5%, to 33820.38. The technology-heavy Nasdaq Composite declined 39.19 points, or 0.3%, to 14051.03.

In a press conference, Fed Chairman

Jerome Powell

stressed that recent gains in inflation had been due to transitory factors and that the economy would need to make “substantial further progress” before the U.S. central bank would begin tapering asset purchases. That assured investors who have worried that the Fed might shift to a more inflation-fighting posture.

“He is letting investors know exactly what they want to hear—that he is going to be very supportive of markets for a very long time,” said

Michael Arone,

chief investment strategist at State Street Global Advisors.

Stocks have been hovering near record levels as the corporate earnings season has gotten off to a better-than-expected start and economic data has shown signs of recovery from the fallout of the Covid-19 pandemic. Still, there is some concern about President Biden’s planned tax increases and the surge in coronavirus cases in India.

“The market [is waiting] to see whether we are going to get another breakout in the economic data, how the recovery is progressing and how much stimulus is going to go through,” said

Willem Sels,

global chief investment officer at HSBC Private Bank. “We are seeing some trade-off between stronger earnings now, which is a positive, and the fear that higher taxes to come could offset that.”

Investors are also paying close attention to earnings this week, including from tech giants such as Apple. In results released Wednesday after markets closed, the iPhone maker reported record revenue for the January-to-March quarter, pushing shares up 4% in late trading.

Earnings must cross a high hurdle to support stocks’ rich valuations. They could also shed light on how tech companies are coping with changing consumer habits as lockdown restrictions ease.

“There hasn’t been a huge reaction to earnings. The market had anticipated a lot of the improvement because it is reflective of what is happening in the economic data,” said Mr. Sels. “That is why earnings season is all about whether there are new messages, for example, around production and input costs.”

In the regular session, Google’s parent company Alphabet climbed $68.06, or 3%, to $2359.04 after reporting results late Tuesday. The tech giant posted record sales for the first quarter, driven by digital ad spending.

Boeing

shares fell $7.01, or 2.9%, to $235.46, weighing on the Dow. The aircraft maker reported its seventh consecutive quarterly loss and booked a charge on its work replacing Air Force One presidential jets because of problems with a supplier.

Spotify Technology

shares slumped $36.08, or 12%, to $256.84 after the music-streaming company said user growth had softened in the first quarter.

Pinterest

tumbled $11.25, or 15%, to $66.33 after the social-media company added fewer users than analysts expected.

Texas Instruments

slid $8.39, or 4.4%, to $181.82 after the chip maker said it expected second-quarter revenue to be less than analysts had been forecasting.

President Biden was set to outline some of his plans to raise taxes on the highest earning Americans at a speech later Wednesday. The plans are part of a $1.8 trillion proposal that includes new spending on child care and education.

In commodities, U.S. oil prices rose to their highest level since March 17. Benchmark U.S. crude futures gained 1.5% to settle at $63.86 a barrel after weekly data showed strong gasoline demand ahead of the summer driving season.

Mr. Powell’s remarks sent government bond yields lower, snapping three consecutive sessions of gains. The yield on the 10-year Treasury note slipped to 1.621%, from 1.622% Tuesday. Bond yields fall as prices rise.

Overseas, the pan-continental Stoxx Europe 600 rose less than 0.1%. Among individual stocks, Deutsche Bank jumped more than 10% after reporting its strongest quarterly earnings in seven years.

Most major Asian markets posted gains. Japan’s Nikkei 225 rose 0.2% while Hong Kong’s Hang Seng added 0.5%. The Shanghai Composite Index rose 0.4%.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Will Horner at William.Horner@wsj.com