US stocks mostly fall while dollar gains after Fed decision

BSS

31 Jul 2025, 09:13

US stocks mostly fall while dollar gains after Fed decision

NEW YORK, July 31, 2025 (BSS/AFP) - US stocks mostly fell while the dollar rallied Wednesday after the Federal Reserve kept interest rates unchanged and avoided suggesting it would soon cut interest rates.

The Fed, as expected, held interest rates steady, despite relentless pressure from President Donald Trump for an interest rate cut.

In a press conference, Fed Chairman Jerome Powell emphasized future monetary policy decisions would depend on economic data, while refraining from sending any signs that a dovish pivot should be anticipated quickly.

Futures markets lowered their odds for a September interest rate cut following the press conference and statement, which included no major tweaks that would have implied an imminent interest rate cut.

"Powell sounded more hawkish than what markets were hoping for," said Angelo Kourkafas of Edward Jones. "It was not a huge surprise, but at the same time, markets have rallied quite a bit partly on expectations of lower interest rates and a Fed cut in September."

Earlier, the Paris and Frankfurt indexes gained after the eurozone economy unexpectedly expanded in the second quarter, which preceded a weekend tariffs deal between the US and the EU that had also bolstered sentiment.

Back in Washington, economic data showed the US economy returned to expansion in the second quarter, notching 3.0 percent growth after a contraction in the first quarter.

But GDP in both quarters was heavily influenced by import activity in response to Trump's aggressive trade policy.

During the press conference, Powell flagged heightened uncertainty surrounding trade talks.

"It's been a very dynamic time for these trade negotiations," he told reporters at a press conference. "We're still a ways away from seeing where things settle down."

While Trump has announced trade deals in recent days with major partners including Japan and the European Union, other negotiations remain a work in progress ahead of an August 1 deadline.

On Wednesday, Trump signed an executive order implementing an additional 40 percent tariff on Brazilian products, bringing the total trade duties to 50 percent.

The move is due to what Trump has called Brazil's "witch hunt" against his far-right ally, former president Jair Bolsonaro, who is accused of attempting a coup in Latin America's biggest economy after losing the 2022 election to Luiz Inacio Lula da Silva.

Markets will get a further reading on the state of the US economy later this week, with reports on inflation on Thursday and on the labor market on Friday.

Investors are also digesting a plethora of earnings reports from big companies.

Late Wednesday, Facebook parent Meta surged in after-hours trading after reporting a 22 percent jump in revenues to $47.5 billion, while Microsoft also rallied after its profit soared above expectations in the recently ended quarter, driven by its cloud computing and artificial intelligence units.

- Key figures at around 2130 GMT -

New York - Dow Jones: DOWN 0.4 percent at 44,461.28 (close)

New York - S&P 500: DOWN 0.1 percent at 6,362.90 (close)

New York - Nasdaq: UP 0.2 percent at 21,129.67 (close)

London - FTSE 100: FLAT at 9,136.94 (close)

Paris - CAC 40: UP 0.1 percent at 7,861.96 (close)

Frankfurt - DAX: UP 0.2 percent at 24,262.22 (close)

Tokyo - Nikkei 225: DOWN less than 0.1 percent at 40,654.70 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 25,176.93 (close)

Shanghai - Composite: UP 0.2 percent at 3,615.72 (close)

Euro/dollar: DOWN at $1.1409 from $1.1547 on Tuesday

Pound/dollar: DOWN at $1.3239 from $1.3351