Fed’s Rate Freeze Sparks Market Rally, but Powell’s Warning Looms Large

U.S. Stocks Rise as Fed Maintains Rates Amid Economic Uncertainty

U.S. stocks finished higher on Wednesday. The Federal Reserve kept interest rates steady,and Chair Jerome Powell noted growing economic uncertainty. The S&P 500 gained 0.43%, the Nasdaq Composite rose 0.27%, and the Dow Jones Industrial Average climbed 0.7%.

Disney’s strong earnings and a surprise boost in Disney+ subscribers lifted the Dow. The Fed maintained its benchmark interest rate at 4.25%-4.5%, unchanged since December. Though, the Fed’s statement and Powell’s press conference highlighted concerns about persistent inflation and a slowing economy.

the Fed acknowledged the risks of higher unemployment and inflation. Powell stated, “Uncertainty about the economy is extremely elevated,” but noted no negative outcomes have materialized yet.

Trade policies are also in focus. Former President Donald Trump said he won’t reduce tariffs on Chinese imports before U.S.-China trade talks in Switzerland. Powell warned that higher tariffs could slow growth and increase inflation.

Markets also responded to a Bloomberg report suggesting Trump’s team may ease restrictions on AI chip exports, benefiting Nvidia. Though, Apple and Alphabet weighed on the Nasdaq. Alphabet fell 8% after reports that Apple may end its search engine partnership with Google.