* Apple shares rally after consensus-busting results
* Most of Europe, Asia shut for May Day holidays
* U.S. dollar, Treasury yields rise (Updates with close of European markets, Fed statement)
By Chuck Mikolajczak
NEW YORK, May 1 (Reuters) - Global equities lost ground on Wednesday, snapping a three-day winning streak after the U.S. Federal Reserve held rates steady as expected but comments from Fed Chairman Jerome Powell cast doubt on whether the central bank's next move would be a rate cut.
The Fed made no move on interest rates as policymakers took heart in continued U.S. job gains and economic growth and held out hope that weak inflation will edge higher.
Stocks initially added to gains, U.S. Treasury yields fell and the dollar stayed weaker after the statement. However, all reversed course after comments from Powell suggesting a recent decline in inflation could be transitory.
Traders of U.S. short-term interest rate futures eased off on bets the Federal Reserve will cut rates before the end of the year, but are still expecting a cut by as early as the Fed's December meeting.
"In the statement the Fed worried about inflation being below their target, but in the press conference Powell said they view that weakness as transitory and they aren’t leaning more towards a cut then they were before," said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.
"So the fact that he's basically saying we aren't closer to a cut then we were before made the market selloff a few points."
President Donald Trump recently called for the Fed to cut interest rates and renew its quantitative easing program.
Early gains were supported by gains in Apple, which rose more than 7% before closing up 4.91% as the top boost to each of the major indexes on Wall Street. The iPhone maker beat depressed expectations despite a record drop in phone revenue, gave an upbeat assessment of its China business, said it would buy back $75 billion in shares and hiked its dividend. The gains pushed Apple closer to $1-trillion market capitalization yet again.
Sentiment also received a boost from early data on the labor market, as a report by payrolls processor ADP showed U.S. private employers added 275,000 jobs in April, well above the 180,000 estimate.
Still, reports on construction spending and U.S. manufacturing came in weaker than expected, sending conflicting signals about the strength of the economy.
S&P 500 earnings are now expected to show growth of 0.5% for the quarter, according to Refinitiv data. At the start of April, earnings were expected to decline by 2%, sparking some concerns about the possible start of an earnings recession.
The Dow Jones Industrial Average fell 162.84 points, or 0.61%, to 26,430.07, the S&P 500 lost 22.1 points, or 0.75%, to 2,923.73 and the Nasdaq Composite dropped 45.75 points, or 0.57%, to 8,049.64.
Trading was thin in Europe, with most markets closed for the May Day holiday and only London and Copenhagen open for trading. UK stocks closed lower, with London's FTSE 100 down 0.44% as it ended at a 1-month low.
The pan-European STOXX 600 index lost 0.07% and MSCI's gauge of stocks across the globe shed 0.43%.
The weaker data on construction and manufacturing dented the dollar and U.S. Treasury yields fell to their lowest level since April 1 after the Fed statement before changing course after Powell's comments.
The dollar index rose 0.18%, with the euro down 0.19% to $1.1194.
Benchmark 10-year notes last rose 1/32 in price to yield 2.5035%, from 2.507% late on Tuesday.
Oil prices initially declined after data from the U.S. Energy Information Administration showed U.S. crude production output set a new record last week but ended mixed as declines were tempered by the intensifying crisis in Venezuela and the stopping of Iranian oil sanction waivers by Washington.
U.S. crude settled down 0.49% at $63.60 per barrel and Brent was last at $72.18, up 0.17% on the day.
Additional reporting by Sinead Carew Editing by Nick Zieminski and Alistair Bell