US stocks were mixed in late trading on Wednesday, with Treasury yields climbing higher. The Federal Reserve held the benchmark federal funds rate steady while upgrading its economic growth assessment. Several major technology companies are set to report their earnings.
The Dow Jones Industrial Average fell 10.75 points, or 0.02%, to 48,992.66, while the Nasdaq Composite gained 72.52 points, or 0.30%, to 23,889.62. The S&P 500 index dipped 2.45 points, or 0.04%, to 6,976.15. The Federal Reserve concluded its first policy meeting of 2026 on Wednesday, announcing it would maintain the federal funds rate in the 3.50%-3.75% range and issuing a more optimistic assessment of economic growth. Semiconductor equipment giant ASML Holding NV saw its US-listed shares surge after reporting record orders and issuing strong 2026 guidance, fueled by the artificial intelligence boom. Data storage infrastructure firm Seagate Technology PLC announced second-quarter profit and revenue that exceeded expectations, sending its stock price soaring. CEO Dave Mosley highlighted robust demand for AI data storage. Several tech giants are preparing to release their financial results. Microsoft, Meta Platforms, and Tesla Motors are scheduled to report quarterly earnings after the market closes on Wednesday, with Apple set to follow on Thursday. The S&P 500 had closed the previous session up 0.4% at a fresh record high, while the Nasdaq Composite advanced 0.9%. The Dow Jones Industrial Average fell by over 400 points, dragged down primarily by a nearly 20% plunge in UnitedHealth Group's stock. The Federal Reserve held its key interest rate steady while signaling an improved economic outlook. The Fed voted on Wednesday to pause its recent series of consecutive rate cuts, as the central bank faces questions about its independence and awaits the appointment of new leadership. As widely anticipated, the Federal Open Market Committee voted to maintain the key rate in the 3.5%-3.75% range. This move halts a sequence of three consecutive 25-basis-point cuts, which had been viewed as preemptive measures against potential labor market weakness. Concurrent with the decision to hold rates, the Committee upgraded its assessment of economic growth and expressed less concern about the labor market relative to inflation. The post-meeting statement noted, "Current indicators point to continued solid expansion in economic activity. Job gains have remained moderate, and the unemployment rate has shown signs of stabilizing. Inflation remains elevated." Notably, the statement omitted a previous phrase indicating that "the Committee judges that risks to the labor market are greater than risks of heightened inflation." This suggests officials believe the Fed's dual mandate of low inflation and full employment is more balanced, arguing for a more patient policy stance. The statement provided limited guidance on the future policy path. Markets anticipate the Fed will wait until at least June before adjusting the benchmark rate again. "In considering the extent and timing of any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," the statement repeated wording added in December, which markets interpret as a potential shift from the easing cycle that began in September 2025. Similar to recent meetings, this decision was not unanimous. Governors Stephen Millen and Christopher Waller dissented, voting against holding rates steady, with both favoring another 25-basis-point cut. Both were appointed by President Trump—Millen filled an unexpired term in September 2025, while Waller was appointed during Trump's first term. Millen's term expires this Saturday; Waller was interviewed for the Fed Chair position but is considered a long shot. Behind this routine policy decision lies the Fed's highly unusual current circumstances. Chairman Jerome Powell has only two more meetings to preside over before his turbulent eight-year term concludes, a period spanning a global pandemic, a deep recession, and seemingly endless confrontations with Donald Trump. Recently, the Justice Department served Powell with a subpoena related to a major renovation project at the Fed's Washington headquarters. Previously, Trump repeatedly threatened to fire Powell and has initiated proceedings to remove Governor Lisa Cook, a case currently pending before the US Supreme Court. At the core of these tensions is a struggle over the Fed's independence—its ability to operate free from political interference. When confirming the Justice Department investigation, Powell was unusually candid, attributing the threat to Trump's attempts to control monetary policy. While past presidents have criticized Fed decisions and tried to pressure policymakers to cut rates, none have been as aggressive and public as Trump. The Fed also confronts a complex economic backdrop. Economic growth, measured by the broadest gauge of GDP, remains strong. Data from the Atlanta Fed indicates third-quarter growth reached 4.4%, with growth for the final three months of the year projected at 5.4%. Simultaneously, labor market hiring has slowed amid the Trump administration's crackdown on illegal immigration. However, layoffs remain contained, and the trend in initial jobless claims is at a two-year low. Inflation presents a more stubborn challenge. Although it has retreated from its 40-year high in 2022, the inflation rate remains near 3%, above the Fed's 2% target, raising concerns among some FOMC officials who advocate pausing, or even halting, rate cuts until more evidence emerges that price pressures are subsiding. Trump's tariff policies represent a potential inflationary influence. Fed economists generally believe tariffs will exacerbate inflationary pressures in the short term but expect some relief later this year. Financial market pricing suggests no more than two rate cuts in 2026 and none in 2027, regardless of who becomes the next Fed Chair. Prediction markets point to Rick Rieder, BlackRock's head of global fixed income, as the leading candidate to succeed Powell.
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