The Dow Jones Industrial Average ended Wednesday modestly lower following the Federal Reserve’s latest policy update, where the central bank kept interest rates steady and Chair Jerome Powell signaled it would wait to see the impact of President Donald Trump’s tariffs on inflation before proceeding on rates.
The 30-stock Dow lost 44.14 points, or 0.10%, and ended at 42,171.66. The S&P 500 slipped 0.03% to close at 5,980.87, and the Nasdaq Composite inched up 0.13% to settle at 19,546.27.
The Fed left its key rate unchanged Wednesday in a range of 4.25% to 4.5%, as markets expected. Nevertheless, it turned out to be a mixed bag of news for investors, as the central bank still signaled two rate cuts this year while simultaneously hinting at a stagflationary threat. The policymakers lowered the 2025 forecast for economic growth to just 1.4% and raised the core inflation outlook to 3.1%.
While Powell said in a press conference following the decision that “we’re beginning to see some effects” of tariffs on inflation, he also said that the policymakers are “well positioned to wait” before making any adjustments to rates.
“The size of the tariff effects, their duration and the time it will take are all highly uncertain,” Powell said. “That is why we think the appropriate thing to do is to hold where we are as we learn more.”
Israel-Iran conflict
Trump told reporters outside the White House Wednesday that the Iranians had reached out and signaled that they would send a delegation to Washington for negotiations.
“They want to negotiate,” the president said. “They even suggested that they come to the White House. That’s courageous. It’s like not easy for them to do.”
Stocks were downbeat earlier this week as the conflict between Israel and Iran mounted, raising oil prices.
The attacks between the two countries entered their sixth day Wednesday as Iran’s supreme leader, Ayatollah Ali Khamenei, said that Iran won’t surrender and warned that the U.S. will “undoubtedly be met with irreparable damage” if it enters the conflict.
“The market just seems very keen to fade geopolitical risk,” Zachary Hill, head of portfolio management at Horizon Investments,“That has been historically the right thing to do, so I think that’s kind of what’s driving us so far today.”.
DoubleLine Capital CEO Jeffrey Gundlach said Wednesday that gold could hit $4,000 soon as institutions step up their buying amid heightened geopolitical uncertainty.
“It’s a clear beneficiary of everything that’s been going on. And it’s the one asset class that’s really doing well this year,” Gundlach said “Closing Bell.” “I think the demand for gold is for real.”
Spot gold traded around $3,392.08 an ounce Wednesday, while U.S. gold futures rose slightly to $3,412.5.
