US: Stocks mostly fall as Fed avoids dovish shift
[NEW YORK] Wall Street stocks finished mostly lower on Wednesday after the Federal Reserve kept interest rates flat and refrained from signaling it will soon cut interest rates.
The Fed, as expected, held interest rates steady, despite relentless pressure from US President Donald Trump for an interest rate cut. In a press conference, Fed Chairman Jerome Powell emphasised future monetary policy decisions would depend on economic data.
“Powell sounded more hawkish than what markets were hoping for,” said Angelo Kourkafas of Edward Jones.
Futures markets lowered their odds for a September interest rate cut following the press conference and statement, which included no major tweaks that would have implied an imminent interest rate cut.
The Dow Jones Industrial Average finished down 0.4 per cent at 44,461.28.
The broad-based S&P 500 shed 0.1 per cent to 6,362.90, while the tech-rich Nasdaq Composite Index rose 0.2 per cent to 21,129.67.
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Earlier, economic data showed the US economy returned to expansion in the second quarter, notching 3.0 per cent growth after a contraction in the first quarter.
But GDP in both quarters was heavily influenced by import activity in response to Trump’s aggressive trade policy.
Powell flagged heightened uncertainty surrounding trade talks.
“It’s been a very dynamic time for these trade negotiations,” he told reporters at a press conference. “We’re still a ways away from seeing where things settle down.”
While Trump has announced trade deals in recent days with major partners including Japan and the European Union, other negotiations remain a work in progress ahead of an Aug 1 deadline.
On Wednesday, Trump signed an executive order implementing an additional 40 per cent tariff on Brazilian products, bringing the total trade duties to 50 per cent.
The move is due to what Trump has called Brazil’s “witch hunt” against his far-right ally, former president Jair Bolsonaro, who is accused of attempting a coup in Latin America’s biggest economy after losing the 2022 election to Luiz Inacio Lula da Silva.
Markets will get a further reading on the state of the US economy later this week, with reports on inflation on Thursday and on the labor market on Friday.
Investors are also digesting a plethora of earnings reports from big companies.
Late Wednesday, Facebook parent Meta surged in after-hours trading after reporting a 22 per cent jump in revenues to US$47.5 billion, while Microsoft also rallied after its profit soared above expectations in the recently ended quarter, driven by its cloud computing and artificial intelligence units. AFP
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