U.S. Stocks Close Mostly Lower Following Fed Announcement

Stocks largely trended downward during Wednesday's trading session, partially retracing the substantial gains recorded the day prior. Although the major indices managed to recover somewhat from their lowest points in late trading, they still ended the day in the red.

The Nasdaq declined by 101.26 points, or 0.5%, closing at 19,632.32. The S&P 500 shed 28.39 points, also down 0.5%, to settle at 6,039.31, while the Dow Jones Industrial Average slipped 136.83 points, or 0.3%, finishing the day at 44,713.52.

The downturn on Wall Street followed the Federal Reserve's widely anticipated decision to maintain interest rates at their current levels after concluding its first monetary policy meeting of 2025.

The Fed opted to keep the federal funds rate target range at 4.25% to 4.50%, aligning with its ongoing objectives of maximizing employment and stabilizing inflation at a 2% rate over the long term. The decision was made amidst persistent concerns over inflation, which remains "somewhat elevated," with the Fed affirming its firm commitment to bringing inflation back to its target.

Interestingly, the central bank omitted previous references that suggested inflation had "made progress" towards the target in its latest statement. The decision comes on the heels of consecutive rate cuts totaling 100 basis points, or 1.0 percentage point, across three prior meetings, starting with a 50 basis point reduction in September.

The Fed is set to convene again on March 18-19, where officials will also release updated forecasts for interest rates, inflation, and broader economic conditions.

Currently, CME Group's FedWatch Tool reflects a 77.6% probability that the Fed will maintain rates, with a 22.3% possibility of a quarter-point rate reduction.

The market's performance was further dragged down by a drop in Nvidia (NVDA) shares, which fell by 4.0% after an 8.8% surge on Tuesday. The decline was triggered by a Bloomberg report indicating that Trump administration officials are considering further restrictions on the sale of Nvidia's chips to China.

Sector Analysis

Interest rate-sensitive housing stocks experienced a sharp decline, with the Philadelphia Housing Sector Index falling by 2.2%. Telecom stocks were also notably weak, evidenced by a 1.5% loss in the NYSE Arca North American Telecom Index. Software and commercial real estate stocks saw significant declines, in contrast, airline and computer hardware stocks posted gains.

International Markets

In overseas activity, the Asia-Pacific markets generally trended upward on Wednesday, albeit some markets remained closed for holidays. Notably, Japan's Nikkei 225 Index rose by 1.0%, while Australia's S&P/ASX 200 Index increased by 0.6%.

European markets presented a mixed picture. The French CAC 40 Index decreased by 0.3%, whereas the U.K.'s FTSE 100 Index gained 0.3%, and Germany's DAX Index climbed by 1.0%.

In the bond market, treasuries exhibited little direction before ending mostly unchanged. Consequently, the yield on the benchmark ten-year note, inversely related to its price, edged up slightly by less than a basis point to 4.555%.

Looking Forward

Thursday's trading is expected to be influenced by earnings reports from major corporations such as Microsoft (MSFT), IBM (IBM), Meta Platforms (META), and Tesla (TSLA), all scheduled to announce their quarterly results following today's market close.

The material has been provided by InstaForex Company - www.instaforex.com
RobotFX