The S&P 500 concluded the trading day with gains amid a session characterized by volatility, as market participants navigated the complexities of Federal Reserve policies and trade-related news. The S&P 500 experienced fluctuations in trading following indications from the Federal Reserve that the likelihood of an economic slowdown and rising prices is on the rise. The broad market index increased by 0.43%, concluding at 5,631.28, whereas the Nasdaq Composite rose by 0.27%, finishing at 17,738.16. The Dow Jones Industrial Average increased by 284.97 points, representing a rise of 0.70%, concluding at 41,113.97. The 30-stock index experienced support from a nearly 11% increase in Disney shares, following the company’s announcement of a fiscal second-quarter earnings beat and an unexpected rise in streaming subscribers.
The Federal Open Market Committee maintained its benchmark overnight borrowing rate within the established range of 4.25% to 4.5%, a position it has sustained since December. The Committee remains vigilant regarding the potential risks associated with its dual mandate, concluding that the likelihood of increased unemployment and inflation has escalated, as stated in the post-meeting announcement. Wednesday’s announcement aligns with growing concerns that a global trade war may elevate prices, thereby complicating the central bank’s efforts to achieve its inflation target of 2%.
During his post-decision press conference, Fed Chair Jerome Powell indicated that if the “large increases in tariffs” that have been announced persist at their current levels, they may result in a deceleration of economic growth, a rise in long-term inflation, and a surge in unemployment. The Fed announcement is “sending a shot across the bow to the administration, saying essentially if you read between the lines, ‘Your policies are leading to higher inflation, higher unemployment,’” stated David Kelly, chief global strategist at JPMorgan Asset Management, during a CNBC “Power Lunch” interview. “This is a somewhat hawkish statement.” It states, ‘We are not going to be in any hurry to cut rates because honestly there are risks to both sides of our mandate here and we are not sure which way we should be playing this.
On Wednesday, President Donald Trump informed reporters that he would not reduce the high tariffs imposed on China as a prerequisite for initiating trade negotiations. His statement was issued in anticipation of the upcoming meetings scheduled for this weekend in Switzerland, where members of the Trump administration will engage with Chinese officials to deliberate on trade issues.
A report from Bloomberg on Wednesday indicated that the Trump administration intends to revoke the AI chip restrictions implemented during the Biden era, contributing to a 3% increase in Nvidia shares. Additionally, the market faced pressure from declines in Alphabet and Apple, which experienced drops of approximately 7% and 1%, respectively. According to a Bloomberg report, Apple’s services chief indicated that the company plans to incorporate artificial intelligence services as search options in the Safari browser moving forward. The report suggests that this may indicate the conclusion of Apple’s collaboration with Google.