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Stocks were flat on Thursday, a day after the Federal Reserve's rate outlook sparked a sell-off.

The Dow Jones Industrial Average dropped 5 points. The S&P 500 was flat and Nasdaq Composite fell 0.15%.

The closely-watch Federal Reserve meeting Wednesday spurred a sell-off in equities after the central bankmoved up its timeline for rate hikes, seeing two increases in 2023. The Fed also hiked its inflation hitting 3.4% this year, a percentage point higher than the FOMC's forecast in March.

Materials stocks were set to drop on Thursday as higher rates may further take the air out of a big commodities rally in 2021. China isalso cracking down on the commodities surgeto ease inflation fears.Freeport-McMoRanled materials stocks lower in premarket trading, down 2%. Copper futures were off by 2%.

Wells FargoandCitigroupwere higher in premarket trading on hopes higher rates will boost profits for banks. Meanwhile, some once-hot tech stocks were lower in premarket trading withZoom VideoandTesladown by about 1%.

Hedge fund legend David Tepper told CNBC's Scott Wapnerthat the Fed did a good job on Wednesday and that "the stock market is still fine for now," Tepper said. The S&P 500 is less than 1% from an all-time high.

On Wednesday, the Dow lost about 265 points and the S&P 500 edged 0.5% lower. The Nasdaq Composite dipped 0.2%.

Markets rallied off their intraday lows Wednesday after Fed Chair Jerome Powell said projections for future rate increases should be "taken with a big grain of salt" and reiterated that he believes that inflation is transitory. Powell also did not issue guidance on when the central bank will begin tapering its bond-buying program.

"You can think of this meeting that we had as the 'talking about talking about' meeting, if you'd like," Powell said when asked about tapering. "I now suggest that we retire that term, which has served its purpose."

The Fed chair said the central bank will continue to monitor the economic recovery and will provide "advanced notice" before announcing any updates regarding tapering.

The Labor Department reported that initial jobless claimsrose last week to 412,000, an improvement from the previous week's 375,000, but above Dow Jones expectations of 360,000.