U.S. stocks closed Wednesday after the Federal Reserve maintained interest rates without changing, with Chairman Jerome Powell acknowledging the growing uncertainty surrounding the economic outlook.
The S&P 500 rose 0.43%, Nasdaq composites increased 0.27%, and Dow Jones Industrial Average added 284 points (0.7%).
Disney helped lift the Dow after reporting better revenue than expected and a surprise jump from Disney+Streaming subscribers.
As expected, the Fed left benchmark interest rates unchanged in the 4.25%-4.5% range.
However, the tone of the post-meeting statement and Powell’s press conference pointed to growing concern that inflation could remain sticky while the economy slows down.
“The committee is paying attention to risks to both sides of the dual mission,” the Fed said in a statement, adding that “the risk of higher unemployment and higher inflation is rising.”
Powell reiterated these concerns, saying, “My gut says that uncertainty about the economy is rising very much,” but he emphasized that negative outcomes have not yet been realized.
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Trading policy
The Fed’s cautious attitude comes as the Trump administration doubles its protectionist trade policy.
On Wednesday, former President Donald Trump told reporters he would not reduce tariffs on Chinese imports ahead of US-China trade talks in Switzerland.
“A significant increase in tariffs could lead to slower growth, increased long-term inflation and increased unemployment,” Powell said.
The market also responded to a Bloomberg report that Trump’s team could raise Biden-era restrictions on AI chip exports, with Nvidia’s shares rising about 2%.
However, after Apple and Alphabet weighed on Nasdaq and suggested that Apple might end its default search engine partnership with Google in Safari, the alphabet slides by about 8% and instead chose its own AI-powered search tool.
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