The Federal Reserve decided to keep interest rates steady in its first policy decision of the year on Wednesday. U.S. stock indexes slipped slightly following the announcement, with the S&P 500 falling 0.5%, the Dow Jones Industrial Average dipping 0.3%, and the Nasdaq composite dropping 0.5%. Fed Chair Jerome Powell stated that the central bank could cut rates if inflation were to slow further or if the job market suddenly weakened.
“Right now, we don’t see that, and we see things as in a really good place for policy and for the economy, and so we feel like we don’t need to be in a hurry to make any adjustments,” he said. The reaction in the bond market was relatively muted, suggesting that rates may stay on hold for a while following their swift drop at the end of 2024. Lower rates would help the economy by making it easier for companies to borrow, but they could also give inflation more fuel.
Nvidia, whose stock has become a symbol of the AI boom, fell 4% on Wednesday after experiencing significant swings earlier in the week due to concerns raised by a Chinese upstart claiming to have developed a large-language model capable of competing with the world’s best without needing top-flight chips.
Fed decision impacts stock movement
Several companies reported better-than-expected earnings, including Chipotle Mexican Grill, T-Mobile US, and Brinker International.
Norfolk Southern, a railroad operator, also beat Wall Street’s profit forecasts. However, Danaher, a life sciences, biotechnology, and diagnostics company, reported results that just missed analysts’ expectations, causing its stock to fall 9.7%. Trump Media & Technology Group announced it would be entering the financial services business through a partnership with Charles Schwab, with more details to be released later this year.
The company’s stock initially saw a double-digit gain but ended the day up 6.8%. In stock markets abroad, indexes were mixed in Europe, with ASML’s stock jumping 5.6% in Amsterdam after announcing strong revenue driven by demand for its advanced chipmaking tools. In Asia, where many markets were closed for holidays, Japan’s Nikkei 225 rose 1%.
