* Fed says economy and job market continue to strengthen
* Indexes up: Dow 0.4 pct, S&P 0.35 pct, Nasdaq 0.02 pct (Updates with reaction to Fed statement)
By Noel Randewich
July 29 (Reuters) - U.S. stocks stayed higher on Wednesday after the U.S. Federal Reserve left its key interest rate unchanged and said the economy and job market continued to strengthen.
Investors have been focused on the outcome of the Fed's two-day policy meeting with many investors divided over whether to expect a rate hike in September or December.
No move on rates was expected this week and the central bank's comments on the economy and inflation did little to initially change expectations.
U.S. interest rates have remained near zero for almost a decade and the Fed has said it will raise rates once it sees a sustained recovery in the economy.
"No change as expected, markets appear comfortable with that, it certainly is not a surprise," Peter Kenny, chief market strategist at Clearpool Group in New York, said after the Fed's statement was released.
U.S. stock indices slightly added to gains after the statement but quickly fell back to earlier levels, with the Nasdaq briefly turning negative.
At 2:09 p.m., the Dow Jones industrial average was up 69.95 points, or 0.4 percent, to 17,700.22, the S&P 500 gained 7.4 points, or 0.35 percent, to 2,100.65 and the Nasdaq Composite dropped 0.93 points, or 0.02 percent, to 5,088.28. (Editing by Don Sebastian and Nick Zieminski)