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U.S. Stock Markets Climb as Fed Holds Rates
(MENAFN) U.S. stock markets closed in positive territory on Wednesday following the Federal Reserve's decision to maintain its benchmark interest rate within the 4.25%-4.5% range, a level unchanged since December. The Nasdaq Composite saw a gain of 0.27%, adding 48.5 points to close at 17,738.16, while the S&P 500 rose by 0.43% to finish at 5,631.28. The Dow Jones Industrial Average experienced a more significant increase of 0.7%, reaching 41,113.97.
The Federal Open Market Committee (FOMC) adhered to expectations by keeping its benchmark overnight borrowing rate in the 4.25%-4.5% range, where it has been since December. "The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen," the FOMC stated in its post-meeting communication.
This decision comes amid growing concerns about the inflationary impact of a potential global trade war. Federal Reserve Chair Jerome Powell cautioned that sustained large tariff increases, such as those recently announced, would likely lead to higher inflation, slower economic growth, and increased unemployment. He indicated that the possibility of the Fed cutting rates this year would "depend" on how the tariffs impact employment and inflation.
When questioned about whether President Trump's calls for interest rate cuts influenced the Fed's decisions, Powell firmly stated that such political pressure had "at all" no impact on the central bank's actions.
Meanwhile, President Trump dismissed the idea of reducing the substantial 145% tariffs on Chinese imports to facilitate renewed trade negotiations with China.
The market also reacted positively to a report suggesting that the U.S. is considering rolling back the Biden administration's chip restrictions. This rule had imposed additional licensing requirements on US exports of AI chips to a significant portion of the world. Following this news, shares of major chip manufacturers saw notable gains, with Nvidia up by 3.1%, AMD rising by 1.76%, Intel adding 1.86%, and Oracle gaining 1.13% at the close.
The Federal Open Market Committee (FOMC) adhered to expectations by keeping its benchmark overnight borrowing rate in the 4.25%-4.5% range, where it has been since December. "The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen," the FOMC stated in its post-meeting communication.
This decision comes amid growing concerns about the inflationary impact of a potential global trade war. Federal Reserve Chair Jerome Powell cautioned that sustained large tariff increases, such as those recently announced, would likely lead to higher inflation, slower economic growth, and increased unemployment. He indicated that the possibility of the Fed cutting rates this year would "depend" on how the tariffs impact employment and inflation.
When questioned about whether President Trump's calls for interest rate cuts influenced the Fed's decisions, Powell firmly stated that such political pressure had "at all" no impact on the central bank's actions.
Meanwhile, President Trump dismissed the idea of reducing the substantial 145% tariffs on Chinese imports to facilitate renewed trade negotiations with China.
The market also reacted positively to a report suggesting that the U.S. is considering rolling back the Biden administration's chip restrictions. This rule had imposed additional licensing requirements on US exports of AI chips to a significant portion of the world. Following this news, shares of major chip manufacturers saw notable gains, with Nvidia up by 3.1%, AMD rising by 1.76%, Intel adding 1.86%, and Oracle gaining 1.13% at the close.
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