4:14pm: Wall Street gains ground
US markets climbed on Wednesday, with all major indexes finishing in the green.
The Dow Jones Industrial Average rose 285 points, or 0.7%, to close at 41,114. The S&P 500 added 24 points, or 0.4%, ending at 5,631, while the Nasdaq Composite gained 49 points, or 0.3%, to finish at 17,738. The small-cap Russell 2000 inched up 4 points, or 0.2%, to 1,987.
The market opened with optimism but gave back some gains as investors weighed the Federal Reserve's decision to keep interest rates steady at 4.50%, along with developments from tech heavyweights.
A major drag on the S&P 500 was Alphabet, which saw its stock tumble more than 9% amid reports that Apple is developing its own AI-powered search engine. If true, it could eventually threaten Google's lucrative deal to remain the default search engine on Apple devices. At the same time, Apple’s push into generative AI marks a significant shift for the company, signaling a more aggressive stance in the tech arms race.
Meanwhile, the Fed's wait-and-see approach left markets on edge, and global attention turned to a US-China meeting in Switzerland aimed at reviving trade talks. With economic signals mixed and tech rivalry heating up, investors are treading carefully as they look for clarity on what comes next.
3:30pm: Fed's cautious stance
Analysts say the Federal Reserve is signaling a shift to a more cautious stance as it navigates persistent inflation, softening labor market data, and trade policy uncertainty, with some warning that the Fed may not resume rate cuts until unemployment rises significantly.
“The best course of action for the FOMC may simply be to wait for more clarity about trade policy and its implications for the US economy,” economists at Wells Fargo wrote in a note following the decision. “There may be some tension in terms of the Fed's dual mandate in coming months.”
With inflation still hovering above the Fed’s 2% target—recent readings show core PCE inflation at 2.6%—and a fresh round of tariffs poised to lift prices further, the central bank faces a difficult balancing act. At the same time, softening labor market indicators suggest that the job market may be losing momentum. Job openings have declined, companies are dialing back hiring plans, and consumer spending is showing signs of fatigue.
“The Federal Reserve is in a bind,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “Concerns about inflation and an economic slump are pulling them in two opposite directions. The Fed is going to have to wait for unemployment to spike before they resume cutting rates, and by that point it might be too late.”
As of 3:30 p.m., the Dow was up 0.4%, the S&P 500 was down 0.1%, and the Nasdaq had fallen 0.6%.
3:10pm: Powell emphasizes patience
The Federal Reserve struck a cautious and patient tone at its latest meeting, leaving interest rates unchanged while emphasizing its data-dependent approach amid growing economic uncertainty.
Kathleen Brooks, research director at XTB, described the meeting as “mundane,” noting that Fed Chair Jerome Powell “repeated the message that the Fed will remain on hold for the foreseeable.” She added that the central bank sounded comfortable with its policy stance, even as it acknowledged “the risks of higher unemployment and higher inflation have risen.” Powell avoided commenting on the timing of the next rate move but did stress that the Fed is focused on balancing inflation risks with employment concerns, saying the tension between the two is “a hypothetical only” for now.
Brooks also highlighted that the market's reaction was mixed: “The S&P 500 initially fell after the statement was released, but it managed to claw back some early losses,” she said, attributing the recovery to Powell avoiding any direct mention of potential rate hikes. Meanwhile, expectations for a rate cut in June dropped to 20% from over 30%, and July expectations declined slightly as well.
On currency markets, Brooks noted that “we continue to think [the dollar] is vulnerable to further downside in the short term,” though the Fed’s inflation focus may slow the pace of the decline.
Charlie Ripley, Senior Investment Strategist at Allianz Investment Management, echoed the Fed’s cautious tone. “Whether you like it or not, the mantra for Chairman Powell’s Fed has always been to make sound policy decisions established from the certainty of economic statistics,” he said. Ripley emphasized the Fed’s commitment to its wait-and-see stance, adding that “patience is a virtue and the Fed seemingly has an abundance of it relative to other market participants.”
2:35pm: Fed hold rates
The Federal Reserve left interest rates unchanged for the third consecutive meeting, keeping its benchmark rate at 4.25%-4.5% despite mounting political pressure from President Trump to ease policy.
In its statement, the Fed cited rising uncertainty in the economic outlook but noted that the economy is still growing at a solid pace.
Officials expressed concern about increased risks of both higher unemployment and inflation, though the labor market remains stable for now.
Inflation remains somewhat elevated, with recent data showing annualized price growth slowing to 2.6% in March but still running at 3.5% for the quarter.
1:13pm: Alphabet falls
Alphabet Inc (NASDAQ:GOOG) shares fell 7% after Apple Inc (NASDAQ:AAPL, ETR:APC) was revealed to have started talks with artificial intelligence startup Perplexity AI about adding search functions to iPhones.
Other AI chatbot functions could also potentially be added.
Apple has been “pretty impressed with what Perplexity has done so we've started some discussions,” said Eddy Cue, Apple's senior vice president of services, during questioning at Google's search monopoly trial.
He also said OpenAI's ChatGPT and Anthropic's Claude were other options, according to The Wall Street Journal.
12:33pm: Trade talks keeps market steady
Stocks are mixed at midday as Wall Street treads carefully ahead of the Fed’s policy decision this afternoon.
The Dow Jones is leading the pack with a 0.6% gain, while the S&P 500 is flat and the Nasdaq is slipping 0.4% under pressure from tech, particularly Alphabet. Shares of the tech ginat fell 7% after Apple was revealed to have started talks with artificial intelligence startup Perplexity AI about adding search functions to iPhones.
Investors are digesting fresh signs of progress—albeit modest—on U.S.-China trade, with high-level talks set for this weekend in Geneva. It's the first major meeting since President Trump slapped 145% tariffs on Chinese imports in April, but expectations for a breakthrough are low.
Treasury Secretary Scott Bessent said the two sides need to “deescalate before we move forward,” hinting at a slow, uneasy thaw in relations.
Meanwhile, traders are almost certain the Fed will hold rates steady later today, but all eyes will be on Chair Jerome Powell’s comments for clues on how the central bank plans to navigate the economic fallout from rising tariffs.
12:01pm: Wednesday's headlines
Wednesday marks the first Federal Reserve interest rate decision since Donald Trump’s recent public criticisms of the central bank’s chair, Jerome Powell, with his threats to replace him spooking markets last month.
Shares in Walt Disney Co (NYSE:DIS, ETR:WDP) were up over 10% on Wednesday morning after reporting second-quarter results that exceeded Wall Street expectations.
China provided a double boost to markets on Wednesday with an interest rate cut and Beijing agreeing to formally begin trade talks with the US this week.
Weight Watchers struck a deal for a "pre-packaged" Chapter 11 bankruptcy, aiming to clear $1.15 billion of debt off its balance sheet.
11:06am: Stocks treading water
Stocks are treading water as traders wait for the Fed’s decision later tonight, with markets holding on to their gains after April’s impressive rebound, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.
“Markets are anxious to hear Powell’s views on the economy this evening, and whether the Fed chairman will give any indications that he might cut rates in June, joining other central banks," Beauchamp commented.
"China’s overnight stimulus moves are likely the kind of thing the president and global investors would like to see from the Fed, but caution will stay Powell’s hand for the time being.”
10:26am: Fed ahead
The Federal Reserve is widely expected to hold interest rates steady at its upcoming meeting, despite mounting political pressure from President Donald Trump, who has criticized Fed Chair Jerome Powell and called for immediate rate cuts.
Trump's renewed demands follow robust job numbers and a slight GDP contraction, which some economists argue is a temporary effect from front-loaded imports ahead of tariff hikes.
Still, market pricing shows only a 7% chance of a rate cut in May.
Analysts anticipate the Fed will maintain a dovish tone, setting the stage for possible cuts starting in June if economic conditions warrant it. While some signs point to a cooling labor market, key indicators like job openings and claims don't yet suggest a recession.
Economists stress that political noise is unlikely to sway the Fed's decisions, with Powell expected to stay focused on inflation risks and avoid being drawn into political debates.
9.52am: Dow Jones leads rebound as Disney dances higher
Wall Street has got up on the right side of bed, with the major benchmarks all opening higher in a midweek rebound after a two-day fall to start the week.
The Dow Jones has gained 0.4% in early trading, with the S&P 500 rising 0.2% and the Nasdaq Composite just under 0.1%. The Russell 2000 index of small caps has added 0.4%.
Disney is the top rise in the Dow and one of the big risers in the S&P 500, up 10% on the back of earnings from the House of Mouse earlier.
Among big tech, Palantir climbed 2.2% and Amazon was up 1.5%, with other trillion-dollar names up around 0.5% and Microsoft flat.
8am: Wall Street rebound expected as China agrees to start talks
US stocks are expected to bounce back on Wednesday as China confirmed that trade talks with the US are set to begin in a matter of days.
Futures for the Dow Jones were up 0.7%, while those for the S&P 500 and Nasdaq 100 were up just over 0.6%.
The prior day, the Dow dropped 1% to close at 40,829, with the S&P slipping 0.8% to 5,607 and the Nasdaq 0.9% to 17,690.
With this evening’s Federal Reserve announcement also awaited, it was revealed that US Treasury Secretary Scott Bessent and trade representative Jamieson Greer are set to meet with their Chinese counterparts in Geneva over the weekend.
The response to that news on Asian and European stocks has been "surprisingly muted" said market analyst Josh Mahony at Scope Markets.
For example, the FTSE 100 was down 0.4% in London, while in Frankfurt and Paris the national benchmarks were down 0.1% and 0.6%.
Nonetheless, after a four-week period that has seen double-digit gains for all the major European indexes, "it comes as no surprise" that much of the upside of US-China trade talks has been "baked in," Mahony added.
Looking ahead, Mahony says today’s Fed meeting provides the main event, with traders "watching out for commentary from Powell over the direction of travel for rates in the face of economic uncertainty.
"The sheer number of unknowns mean that we are highly unlikely to see the Fed cut rates this time around. However, the events of the past week have also seen markets lose confidence over the potential for a June cut, with a pause going from a 33% outside chance to the 70% base case."
In company news, Walt Disney Co (NYSE:DIS) shares are up 6% premarket as revenues and earnings have just come in higher than expected.
CEO Bob Iger said it was an "outstanding performance", driven by the Entertainment and Experiences businesses.
Advanced Micro Devices Inc (NASDAQ:AMD) shares are up 1.9% premarket after beating on earnings expectations overnight.
CEO Lisa Su said the chipmaker had an "outstanding start" to 2025, driven by "expanding data center and AI momentum".