The S&P 500 rose in choppy trading after the Federal Reserve signaled that the risks for an economic slowdown and higher prices are increasing.
The broad market index added 0.43% to close at 5,631.28, while the Nasdaq Composite gained 0.27% to end at 17,738.16. The Dow Jones Industrial Average climbed 284.97 points, or 0.70%, and settled at 41,113.97. The 30-stock index was aided by a nearly 11% pop in Disney shares after the company reported a fiscal second-quarter earnings beat and a surprise jump in streaming subscribers.
As expected, the Federal Open Market Committee held its benchmark overnight borrowing rate in a range between 4.25% to 4.5%, where it has been since December.
“The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen,” the post-meeting statement read.
Wednesday’s announcement coincides with increasing worries that a global trade war could send prices higher, complicate the central bank’s path toward bringing inflation down to its 2% goal.
Fed Chair Jerome Powell said during his post-decision press conference that if the “large increases in tariffs” that have been announced remain at their current levels, they could lead to a slowdown in economic growth, an uptick in long-term inflation and an increase in unemployment.
The Fed announcement is “sending a shot across the bow to the administration, saying essentially if you read between the lines, ‘Your policies are leading to higher inflation, higher unemployment,’” said David Kelly, chief global strategist at JPMorgan Asset Management, in a CNBC “Power Lunch” interview. “This is a somewhat hawkish statement. It says, ‘We are not going to be in any hurry to cut rates because honestly there are risks to both sides of our mandate here and we are not sure which way we should be playing this.’”
A report from Bloomberg on Wednesday that the Trump administration plans to rescind Biden-era AI chip restrictions helped Nvidia shares rise 3%.
President Donald Trump earlier Wednesday told reporters that he would not lower the steep tariffs on China as a condition to begin trade negotiations. His statement came ahead of meetings set to take place this weekend in Switzerland between Trump administration members and Chinese officials to discuss trade matters.
Also pressuring the market were declines in Alphabet and Apple, which dropped about 7% and 1%, respectively. Apple’s services chief said the company is looking to add artificial intelligence services as search options in Apple’s Safari browser in the future, per a Bloomberg report. That could signal the end of Apple’s partnership with Google, according to the report.