Wall Street ended Wednesday’s session on a mixed note as the Federal Reserve kept interest rates steady but flagged rising risks of both inflation and economic slowdown.
The Dow Jones Industrial Average climbed over 230 points, powered by strong gains in Disney shares, while the Nasdaq Composite dipped amid pressure on major tech names like Alphabet and Apple.
Investors balanced optimism from strong corporate earnings with caution following the Fed’s warnings and renewed trade tensions between the US and China.
Fed holds rates, warns of rising inflation and slowdown risks
As widely anticipated, the Federal Open Market Committee (FOMC) kept the benchmark interest rate unchanged in the range of 4.25% to 4.5%—a level it has held since December.
However, the Fed’s post-meeting statement introduced a more cautious tone, noting that risks to both employment and price stability have increased.
“The Committee is attentive to the risks to both sides of its dual mandate,” the statement said, “and judges that the risks of higher unemployment and higher inflation have risen.”
Federal Reserve Chair Jerome Powell reinforced this message during his press conference, warning that recent tariff escalations could further complicate the central bank’s mission to curb inflation.
Powell cautioned that sustained high tariffs could drag down economic growth, increase long-term inflation, and push up joblessness.
Dow rallies on Disney earnings beat
The Dow Jones Industrial Average rose 237 points, or 0.6%, to close higher for the day.
A major contributor to the rally was Disney, whose shares jumped after the company reported better-than-expected fiscal second-quarter earnings.
More notably, Disney surprised investors with a sharp rise in streaming subscribers, fueling renewed confidence in the company’s direct-to-consumer strategy.
Nasdaq underperforms as Apple, Alphabet slide
In contrast, the Nasdaq Composite fell 0.3%, dragged lower by weakness in heavyweight tech stocks.
Alphabet shares dropped around 8% following a Bloomberg report suggesting Apple may soon end its partnership with Google Search.
The report indicated that Apple is exploring the integration of artificial intelligence-powered search options into its Safari browser, potentially replacing Google as the default search engine.
Apple stock also slipped by 1.5% on the news, adding further pressure on the tech-heavy index.
Nvidia shares gained around 2% after a Bloomberg report suggested the Trump administration may revoke certain Biden-era restrictions on AI chip exports to China.
The move, if confirmed, would ease concerns over trade constraints for US semiconductor companies and offer a tailwind to the broader chip sector.
Trump firm on tariffs ahead of Geneva trade talks
President Donald Trump added to the day’s cautious undertone by confirming he will not reduce tariffs on Chinese imports as a precondition for upcoming trade talks.
The US and Chinese officials are scheduled to meet this weekend in Switzerland for formal negotiations.
While the talks may offer a diplomatic off-ramp, investors remain wary of escalating tensions and their impact on global inflation and supply chains.
Key takeaways
- Fed holds interest rates steady but signals higher risks of inflation and economic slowdown.
- Dow Jones rises 0.6%, led by Disney’s strong earnings and streaming subscriber growth.
- Nasdaq slips 0.3% as Alphabet and Apple tumble on AI-related search competition concerns.
- Nvidia up 2% amid reports of easing AI chip export restrictions.
- US-China trade tensions remain in focus ahead of Geneva talks.
As global trade tensions resurface and the Fed adopts a more guarded stance, markets may see continued volatility.
Investors are advised to keep a close eye on upcoming data, geopolitical developments, and any further signals from central bankers.
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