Fed Keeps Rates Steady, Avoids September Guidance
U.S. stocks ended mixed on Wednesday following the Federal Reserve’s decision to maintain interest rates. The central bank acknowledged moderate economic growth and left room for future policy adjustments, but gave no clear signals about a potential rate cut in September.
While the decision to hold was expected, two Fed governors opposed it, favoring an immediate cut. During the press conference, Chair Jerome Powell emphasized that any future rate decisions will depend on incoming data. He noted that it remains too early to assess the full impact of ongoing trade policies on economic conditions.
Equity and Currency Markets React to Powell’s Comments
The Dow Jones fell 0.38%, while the S&P 500 dipped 0.12%. The Nasdaq rose 0.15%, supported by tech sector strength. Global equities also declined, with MSCI’s index of world stocks down 0.28%.
In currency markets, the U.S. dollar extended gains. The dollar index rose 1.01%, while the euro dropped 1.13% and the yen weakened 0.67%. The Canadian dollar and the British pound also lost ground against the greenback.
U.S. Treasury yields moved higher. The 10-year note yield increased to 4.366%, the 30-year yield to 4.895%, and the 2-year note—closely tied to Fed policy expectations—rose to 3.935%.
Tariff Moves Drive Commodity Volatility
Tariff developments triggered sharp price movements across commodities. U.S. crude settled up 1.14% at $70 per barrel, while Brent rose 1.01% to $73.24. Investors remained focused on geopolitical tensions and looming trade deadlines imposed by President Trump.
Gold prices dropped 1.58% to $3,273.59 an ounce after Powell’s remarks dampened rate cut expectations. Strong U.S. economic data earlier in the day had already pressured gold downward.
Copper prices were hit hardest. Comex copper futures plummeted 19.5% after Trump announced 50% tariffs on certain copper imports, effective August 1. This unwound a previous premium over London prices, as traders reassessed assumptions about the domestic market’s benefit from the duties.
Tariff Policy Escalates, Economic Signals Mixed
President Trump signed additional tariff orders on Wednesday, including a 50% tariff on imports from Brazil and a 25% tariff on goods from India, both starting August 1. These actions followed the conclusion of U.S.-China trade talks with no major breakthroughs.
Earlier in the day, government data showed that U.S. GDP rose 3% in the second quarter, exceeding expectations. However, analysts noted that the improvement was largely driven by a drop in imports rather than underlying demand, which grew at its slowest pace in over two years.
Meanwhile, private payroll data showed stronger-than-expected job growth in July. ADP reported a gain of 104,000 jobs, recovering from a revised 23,000 decline in June.