US stocks slip, dollar rises after Fed holds rates steady

US stock markets mostly retreated and the dollar strengthened on Wednesday after the Federal Reserve left interest rates unchanged and signaled no immediate plans for cuts, defying investor hopes for a more dovish stance.

As widely anticipated, the Fed maintained its benchmark rate, despite ongoing calls from President Donald Trump for a rate cut. During his press conference, Fed Chair Jerome Powell reiterated that future policy would be guided by incoming economic data, offering no clear hints that easing is on the horizon.

"The tone from Powell was more hawkish than markets wanted," said Angelo Kourkafas of Edward Jones. "There was no big surprise, but equities had been pricing in rate cuts, especially by September."

Following the Fed’s announcement and Powell's comments, futures markets scaled back expectations for a rate reduction in September, as the Fed's statement included no major changes pointing to imminent action.

European markets had earlier posted modest gains, buoyed by stronger-than-expected second-quarter growth in the eurozone and optimism from a weekend trade agreement between the US and the EU.

Meanwhile, US economic data showed the nation’s GDP grew 3.0% in Q2, rebounding from a contraction in the first quarter. However, economists noted that the figures were heavily influenced by shifting import patterns linked to the Biden administration’s ongoing trade battles, a continuation of Trump-era tensions.

Powell acknowledged the uncertainty surrounding global trade negotiations, stating, "It’s been a very dynamic time for these trade negotiations... we’re still a ways away from seeing where things settle down."

Despite recently announced trade deals with Japan and the EU, talks with other partners remain unresolved as the August 1 deadline approaches. On Wednesday, President Trump signed an executive order imposing an additional 40% tariff on Brazilian goods, bringing total duties to 50%. The move was a response to what Trump described as Brazil’s political "witch hunt" targeting his ally, former president Jair Bolsonaro, who faces accusations of attempting a coup following his 2022 election loss.

Investors now await further US economic indicators later this week, including inflation data on Thursday and a jobs report on Friday. The market is also digesting a slew of corporate earnings.

After the closing bell, tech giants delivered standout results. Meta Platforms jumped in after-hours trading following a 22% revenue surge to $47.5 billion, while Microsoft beat profit expectations, driven by growth in cloud computing and artificial intelligence.

Market snapshot as of 2130 GMT:

Dow Jones: ↓ 0.4% at 44,461.28
S&P 500: ↓ 0.1% at 6,362.90
Nasdaq: ↑ 0.2% at 21,129.67
London FTSE 100: Flat at 9,136.94
Paris CAC 40: ↑ 0.1% at 7,861.96
Frankfurt DAX: ↑ 0.2% at 24,262.22
Tokyo Nikkei 225: ↓ <0.1% at 40,654.70
Hong Kong Hang Seng: ↓ 1.4% at 25,176.93
Shanghai Composite: ↑ 0.2% at 3,615.72
Euro/Dollar: ↓ at $1.1409 (from $1.1547)
Pound/Dollar: ↓ at $1.3239 (from $1.3351)
Dollar/Yen: ↑ at 149.50 yen (from 148.46 yen)
Euro/Pound: ↓ at 86.15 pence (from 86.48 pence)
WTI Crude: ↑ 1.4% at $7.18/barrel
Brent Crude: ↑ 1.1% at $72.47/barrel