US stocks closed higher on Wednesday as investors assessed the economy’s prospects following the Federal Reserve’s decision to leave interest rates unchanged. The S&P 500 ticked up 0.4%, while the tech-heavy Nasdaq Composite rose about 0.3%. The Dow Jones Industrial Average was up 0.7%, or nearly 300 points.
The Fed left interest rates at a range of 4.25% to 4.5% for the third consecutive meeting. The central bank noted in its statement that “the risks of higher unemployment and higher inflation had risen.” Fed Chair Jerome Powell reiterated that the central bank is adopting a “wait and see” approach. “Uncertainty about the path of the economy is extremely elevated, and the downside risks have increased,” Powell stated.
He added that while there are scenarios where it might be appropriate to cut rates this year, it remains uncertain. Markets had cautiously welcomed news on Tuesday that top US and Chinese officials would meet this weekend for the first time since President Trump increased tariffs on Chinese imports to 145% in April. The anticipation of talks has helped maintain stock levels, although significant progress in the trade deal at the Geneva meeting is not expected.
Nvidia stock rose more than 3% following reports that the Trump administration might repeal AI chip export restrictions imposed under the previous Biden administration. Bloomberg reported that this repeal is part of Trump’s efforts to change the AI Diffusion rule that was set to go into effect in May. This move is expected to lift constraints on the export capacity of AI chips.
Lions Gate and Starz stocks saw significant surges of 45% and 23%, respectively, after they began trading as standalone companies.
Markets reflect investor optimism amidst uncertainties
Lions Gate Entertainment Corp.
finalized the breakup of its businesses earlier in the day. Starz is now trading on Nasdaq under the ticker “STRZ,” while Lions Gate is trading on the New York Stock Exchange under the symbol “LION.”
Lions Gate CEO Jon Feltheimer noted, “Today we’re launching an exciting new chapter as a leading pure play content company.”
In his press conference, Powell leaned into the economic uncertainty, emphasizing the elevated risks of inflation and unemployment. Despite persistent inquiries, Powell provided limited new insights into the Fed’s outlook but highlighted that public concern over inflation and tariffs is real, even though major economic impacts have yet to materialize.
“That shock hasn’t hit yet,” Powell said, adding that the Fed is closely watching both sentiment and economic data. Powell acknowledged that the Fed lacks tools to address supply chain disruptions, such as the recent drop in imports from China. He emphasized that managing supply chains is more suited to the administration and the private sector.
“Our interest rate policy is aimed at managing demand, not resolving supply-side issues,” said Powell, although the Fed continues to monitor the economic indicators to keep inflation expectations anchored. Despite public pressure from President Trump to cut rates, Powell maintained that external noise does not influence the Fed’s decisions. He also reflected on past rate cuts, noting that the September 50 basis point cut was considered delayed rather than preemptive due to the then state of the economy and inflation trends.
Powell closed the session by reiterating that the Fed doesn’t need to hurry to change interest rates, stressing the importance of allowing data to guide the appropriate monetary policy response. “We think we are in a good position to let things evolve and become clearer in terms of what should be the monetary policy response,” he stated. Stock markets ended the day on a high, reflecting investor optimism amidst economic uncertainties and ongoing tariff discussions.
