Stocks on Wall Street tumbled sharply on Wednesday, with the Dow Jones Industrial Average sinking over 1,100 points, marking its steepest single-day decline since April 2025.
The Federal Reserve decided to keep interest rates unchanged, but three officials who voiced concerns about inflation voted for a rate hike. Meanwhile, U.S. President Donald Trump stated that the nation would deliver a "severe" blow to Iran in retaliation for a recent attack on American forces stationed in the Middle East.
West Texas Intermediate crude oil futures surged more than 7%, breaking above the $90 per barrel mark.
U.S. Markets
At the closing bell, the Dow fell 1,153.18 points, or 2.19%, to finish at 51,594.14. The Nasdaq Composite lost 433.97 points, or 1.74%, closing at 24,442.94. The S&P 500 declined 112.63 points, or 1.52%, ending the session at 7,316.15.
In the semiconductor space, SK Hynix (SKHY.US) dropped 2.6%, SanDisk (SNDK.US) fell 7%, and Micron Technology (MU.US) tumbled 9.9%. NVIDIA (NVDA.US) slipped 3.5%, while Seagate Technology (STX.US) managed to gain over 2%.
Chinese stocks listed in the U.S. bucked the trend, with the Nasdaq Golden Dragon China Index rising 1.7%. Shares of Li Auto (LI.US) advanced more than 4%.
European Markets
In Europe, Germany's DAX 30 lost 34.71 points, or 0.14%, to close at 25,457.88. The UK's FTSE 100 added 36.18 points, or 0.33%, ending at 10,907.20. France's CAC 40 fell 50.51 points, or 0.60%, to 8,408.27. The Euro Stoxx 50 index declined 40.16 points, or 0.64%, finishing at 6,249.35. Spain's IBEX 35 slumped 326.14 points, or 1.65%, to 19,400.86, while Italy's FTSE MIB fell 271.19 points, or 0.52%, to close at 51,427.00.
Asian Markets
In Asia, Japan's Nikkei 225 index shed 1.49%. South Korea's Kospi Composite Index experienced a steep decline of 5.98%.
U.S. Dollar Index
The U.S. Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.52% on the day, settling at 100.886 in late New York trading.
In currency markets, the euro was trading at $1.1452, up from $1.1387 in the previous session. The British pound rose to $1.3364, compared to $1.3289 previously. The dollar weakened against the Japanese yen, falling to 163.32 yen from 163.86. It also declined against the Swiss franc to 0.8149 from 0.8190, against the Canadian dollar to 1.4040 from 1.4105, and against the Swedish krona to 9.6434 from 9.6954.
Cryptocurrency
Bitcoin was hovering near the $40,000 mark. Ethereum saw a slight dip of 0.25% to $1,906.9.
Crude Oil
Oil prices rebounded from their biggest three-day decline since 2020, as a fresh outbreak of conflict in the Middle East reminded the market of persistent supply risks in the region. The September delivery of West Texas Intermediate (WTI) crude rose 6.6%, settling at $84.46 per barrel. The September contract for Brent crude jumped 7.9% to close at $90.74.
Precious Metals
Spot gold was trading at $4,066.22 per ounce. Spot silver was last seen at $57.638 per ounce.
Macro News
Fed Holds Steady But Internal Divisions Deepen; Statement Matches June. The Federal Reserve decided to keep interest rates unchanged, but a split vote highlighted growing conviction among some policymakers that rate hikes are needed to curb rising inflation. Lorie Logan, Michelle Bowman, and Neel Kashkari dissented, voting for a 25-basis-point increase. This marks the fifth consecutive meeting where officials have opted to hold rates steady.
The remainder of the post-meeting statement was identical to the one released after the June gathering. Officials reiterated their commitment to "achieving price stability." However, the dissenting votes signal that for newly appointed Fed Chair Kevin Warsh, maintaining the status quo will be an increasingly difficult battle if inflation concerns mount. President Trump has repeatedly called for rate cuts, including earlier this week. Warsh, who was nominated by Trump earlier this year, has stated he would ensure policy decisions remain free from political influence.
Warsh acknowledged a "consensus" within the Fed despite a "vigorous debate." "We had a good internal debate," said Chair Warsh. "While the vote was divided, there is a lot of agreement among officials." "I heard a general consensus that we have the power, the tools, and the statutory function to achieve price stability," he said during a press conference following the decision. "There was a difference of opinion on today's decision, but I don't think that fully captures the essence of the discussion. I leave this meeting more convinced than ever that this team is fully capable of winning this battle against high inflation."
Trump Vows to 'Hit Iran Hard,' Seeks Authority to Impose Tariffs. On the afternoon of July 29, U.S. President Donald Trump told the media at the White House that, in response to "Iran firing missiles at American forces in the Middle East," the U.S. would "deliver a crushing blow to Iran" and that it was now "America's turn to retaliate." Trump stated, "Iran knows this strike is inevitable and has asked the U.S. not to carry it out," but the U.S. will "teach them a lesson."
Regarding a "drone attack on an LNG tanker in Egyptian waters," Trump said he had been briefed on the matter and that "the issue will be resolved." Earlier that day, in an interview, Trump said the U.S. would respond with "strong retaliation" and "hit Iran hard." He also expressed his desire to add a provision authorizing the U.S. to impose tariffs on Iran to a Russia sanctions bill previously pushed by the late Senator Lindsey Graham.
Stock News
Microsoft's Q4 Revenue Hits $90 Billion, Azure Cloud Revenue Breaks $100 Billion Mark. Microsoft (MSFT.US) reported robust growth in its cloud business, along with an increase in paying AI users, even as investors closely watched whether the tech giant's heavy spending on data centers is yielding returns. For its fiscal fourth quarter, Microsoft reported earnings per share of $4.81, up from $3.65 a year earlier and beating analyst expectations of $4.24. Quarterly revenue reached $90 billion, surpassing the forecast of $87.6 billion and representing an 18% year-over-year increase.
Azure remains one of the most closely watched indicators for investors and is seen as a bellwether for overall AI demand. "Azure revenue surpassed the $100 billion mark for the first time, and Microsoft 365 Copilot now has over 30 million paid seats, reflecting customer confidence in our ability to drive their AI transformation," said CEO Satya Nadella. Azure cloud revenue for the fourth quarter came in at $39.3 billion, growing 43%, which was ahead of the 40% growth that analysts had predicted. Microsoft shares rose as much as 4% in after-hours trading. The stock has fallen roughly 18% so far this year.
Meta Posts Record Revenue, But AI Costs Weigh on Shares. Meta Platforms (META.US) reported record revenue for the second fiscal quarter, but an update on its AI spending plans fueled investor concern about the cost of its infrastructure buildout. Meta slightly raised the lower end of its full-year capital expenditure guidance from $125 billion to $130 billion, while keeping the upper end at $145 billion unchanged.
The company posted second-quarter revenue of $60.8 billion, a 28% increase year-over-year, but net income of $15.8 billion fell short of analyst estimates. In response, Meta shares fell over 9% in after-hours trading. In its race to keep up in the AI competition, Meta has already invested tens of billions of dollars in chip procurement, data center construction, and top talent recruitment. The company recently partnered with BlackRock to finance at least $12 billion for a Texas data center. Meta's free cash flow in the second quarter was $784 million.
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