* Fed holds rates steady, sees portfolio cuts "relatively soon"
* Boeing, AT&T shine after quarterly results, Ford falls
* Financial share declines keep S&P 500 gains in check
* Indexes up: Dow 0.45 pct, S&P 0.03 pct, Nasdaq 0.16 pct (Updates with close of U.S. markets)
By Lewis Krauskopf
NEW YORK, July 26 (Reuters) - U.S. stocks climbed modestly on Wednesday to record closing highs after the Federal Reserve kept interest rates unchanged and strong earnings reports from Boeing and AT&T.
The U.S. central bank's statement did not dramatically sway Wall Street's major indexes, which hit all-time peaks on a busy day of corporate earnings reports. A slide in financial shares held back gains for the S&P 500.
As broadly expected by investors, the Fed maintained its benchmark lending rate and said it was continuing the slow path of monetary tightening. It said it expected to start winding down its massive holdings of bonds "relatively soon" in a sign of confidence in the U.S. economy.
"The Fed decision of itself was fairly expected and had no real impact on the market," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey. "But I think in a broader sense the willingness of the Fed to move cautiously has provided some protection against the market selling off."
The Dow Jones Industrial Average rose 97.58 points, or 0.45 percent, to 21,711.01, the S&P 500 gained 0.7 points, or 0.03 percent, to 2,477.83 and the Nasdaq Composite added 10.57 points, or 0.16 percent, to 6,422.75.
In its statement following a two-day policy meeting, the Fed's rate-setting committee indicated the economy was growing moderately and job gains had been solid. But it noted that both overall inflation and a measure of underlying price gains had declined and said it would "carefully monitor" price trends.
Following the statement, traders' bets that the Fed would raise rates at its December meeting stood at only 38 percent, according to Thomson Reuters data.
"They are, I don’t want to use the word 'trapped' because the market has kind of bailed them out with one event or another, but they are in a tough spot here for the rest of 2017," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago. "Even that last hike looks like it might be a difficult one to make."
Financials, which tend to perform better when interest rates rise, ended down 0.6 percent.
Telecommunications were the best performing sector, propelled higher by a 5.0-percent gain in AT&T after its results.
Boeing shares soared 9.9 percent after the plane maker posted quarterly profit and cash flow well ahead of Wall Street estimates. The stock gave the biggest lift to the Dow and the S&P 500.
Shares of Ford Motor and health insurer Anthem both fell after their respective quarterly results.
With about one-third of the S&P 500 having reported results, earnings are now expected to have climbed 9.9 percent in the second quarter, up from a projection of an 8-percent rise at the start of the month, according to Thomson Reuters I/B/E/S.
Investors have been counting on strong earnings to justify the relatively expensive valuations for stocks.
Advancing issues outnumbered declining ones on the NYSE by a 1.02-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored decliners.
About 6.6 billion shares changed hands in U.S. exchanges, above the 6.1 billion daily average over the last 20 sessions. (Additional reporting by Saqib Iqbal Ahmed and Chuck Mikolajczak in New York and Tanya Agrawal in Bengaluru; Editing by Nick Zieminski and James Dalgleish)