US stocks extended losses on Wednesday as the Nasdaq dropped over 1 percent following the Federal Reserve’s decision to keep interest rates unchanged. The US Central Bank also didn’t explain when it might ease borrowing costs further, leaving investors cautious.
The US stock market was already in red before the announcement, with tech giants like Microsoft and Nvidia leading the downslide. As per the Reuters report, the Fed has also removed earlier statements related to inflation which stated that inflation had made progress toward its 2 percent target.
US Market response to Fed’s decision
The decision to hold rates steady was anticipated as FED applied three successive rate cuts earlier in 2024. Despite this, market participants were curious to watch out for signals on when more cuts may be implemented.
Also ReadFed leaves rates unchanged, drops reference to inflation ‘progress’ from policy statement
The Dow Jones Industrial Average declined 222.09 points to 44,630.22 whereas the S&P 500 dropped 49.52 points to 6,018.99. The Nasdaq composite was hit hardest, falling 221.33 points to 19,512 .25.
Earlier in the week, Nvidia had already witnessed selling pressure and declined by 6 percent. The major reason behind the drop was the launch of AI models by Chinese startup DeepSeek, which announced that the technology which is used is cost-effective and operates on less advanced chips in comparison to OpenAI. Microsoft also slided by 1.1 per cent ahead for its earnings announcement, along with reports expected from Tesla and Meta.
Meanwhile, the US dollar strengthened against major currencies and went up by 0.35 percent to 0.907 against the Swiss franc. It weakened a bit in front of the Japanese yen, dropping to 155.25 whereas the euro went down to 0.17 per cent.
(With inputs from Reuters)
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