The Federal Reserve held benchmark interest rates steady for a fifth consecutive session.
- Fed Chair Kevin Warsh's second policy decision passed by a 9-3 vote, with three policymakers favouring a quarter-point hike.
- Quarterly results from Microsoft, Meta and Qualcomm also weighed on markets.
- On the geopolitical front, conflict between the U.S. and Iran escalated again after the latter launched a surprise attack on U.S. military troops in the Middle East.
U.S. futures edged higher in the overnight session late Wednesday even as big tech earnings results came in mixed, and the Federal Reserve’s decision to hold benchmark rates steady stoked inflation concerns.
Meanwhile, U.S. President Donald Trump told Fox News on Wednesday that America would strike down "hard" on Iran after the Middle Eastern country launched surprise attacks on U.S. troops. Oil prices climbed higher on the news.
Nasdaq-100 futures climbed 0.89%, Dow futures were up 0.21%, and S&P 500 futures gained 0.39% at 9:20 PM EDT.
At the close of the regular trading session, all benchmark indexes were in the red. The Dow Jones Industrial Average lost about 1,153 points, closing down 2.19%, marking its worst session in over a year. The S&P 500 also fell 1.52% and the Nasdaq Composite declined 1.74%.
| Index | Move | Close |
| Dow Jones Industrial Average | -2.19% | 51,594.14 |
| S&P 500 | -1.52% | 7,316.15 |
| Nasdaq Composite | -1.74% | 24,442.94 |
What’s Driving US Markets?
While U.S. futures looked past a myriad of negative catalysts, benchmark indexes reacted to multiple triggers, including the Federal Reserve’s decision to keep rates steady, a plunge in multiple technology stocks, and rising tensions in the Middle East.
The central bank kept benchmark rates unchanged for a fifth consecutive session in Fed Chair Kevin Warsh's second policy decision, which passed by a 9-3 vote, with three policymakers favouring a quarter-point hike.
The Fed said inflation remains elevated, partly due to energy pressures linked to the Iran conflict, and reaffirmed their commitment to price stability.
"We'll be continuing to watch that market information, see how it responds to incoming events. And that can help inform our decision-making when we meet in seven or eight weeks," Warsh said.
Professor of Economics and Public Policy at the University of Michigan, Justin Wolfers, said in a post on X that he was less worried about the decision itself and more concerned Warsh's approach that included “less guidance, less explanation, and a lot more uncertainty.”
Meanwhile, quarterly results from Microsoft Corp. (MSFT), Meta Platforms Inc. (META) and Qualcomm Inc. (QCOM) also weighed on markets.
Microsoft’s fourth-quarter earnings soared past expectations owing to strong cloud revenues, pushing the stock more than 7% higher overnight. However, both Meta and Qualcomm failed to impress investors with their prints, sending the stocks down nearly 7% and over 3% lower in the extended trading session.
Chip stocks also declined, extending losses to a fifth consecutive session. The VanEck Semiconductor ETF (SMH) lost nearly 5% and the iShares Semiconductor ETF (SOXX) fell about 5.4% at close.
On the geopolitical front, conflict between the U.S. and Iran escalated again after the latter launched a surprise attack on U.S. military troops in the Middle East. The U.S. said that it had retaliated to the attacks.
“U.S. forces began launching strikes against Iran at 8 p.m. ET today. The strikes are a powerful response to yesterday's attempted Iranian attacks on U.S. forces based in the Middle East,” the U.S. Central Command said in a post on X.
In a separate post, it said, “CENTCOM forces continue to strictly enforce the U.S. blockade against Iran. As of July 29 CENTCOM has redirected 20 commercial vessels, disabled 2, and boarded 2.”
Global oil prices were mixed at the time of writing. Brent crude futures expiring in September declined about 0.4% to $90.38 a barrel. Meanwhile, WTI crude futures expiring in September were trading at $84.61per barrel, up about 0.18% at the time of writing.
“We remain exceedingly skeptical that we are on the brink of a major diplomatic breakthrough that will resolve the nuclear standoff that started the war,” RBC Capital Markets LLC analysts said in a note, as per Bloomberg. “The ongoing threat of missiles, mines, drones, and Tehran tolls will keep a significant portion of the shipping market on the sidelines,” they added.
Trending Stocks To Watch
ImmunityBio Inc. (IBRX): Shares of the company jumped more than 8% overnight after ImmunityBio secured UAE marketing approval for Anktiva to treat certain bladder and lung cancers.
Microsoft Corp. (MSFT): The technology giant’s shares gained more than 7% overnight after it reported a jump of 18% in total revenue to $90 billion, while earnings per share of $4.81 beat market expectations.
SoFi Technologies Inc. (SOFI): The fintech company was on the retail radar amid its second-quarter (Q2) results announcement. Shares plunged more than 8% at close on Wednesday as flat profit guidance and declining tech revenue overshadowed strong top line results.
Meta Platforms Inc. (META): The Facebook owner’s shares were down about 7% overnight at the time of writing as it posted weaker-than-expected Q2 profit and issued a soft sales outlook for the next quarter.
Other Market Trends
Yields on the 10-year Treasury climbed to 4.683% amid rising geopolitical tensions, while spot gold prices increased to $4,081.09 per ounce.
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY), the SPDR Dow Jones Industrial Average ETF Trust (DIA) and the Invesco QQQ Trust (QQQ) all edged higher at the time of writing.
Retail sentiment for SPY and QQQ was ‘bearish,’ while it was ‘bullish’ for DIA.
The iShares 20+ Year Treasury Bond ETF (TLT) was down 0.12% amid ‘bearish’ sentiment.
Asian markets were trading mixed at the open on Thursday. South Korea's KOSPI and Japan’s Nikkei 225 were trading higher at the time of writing. China’s SSE Composite and Australian stocks were edging lower.
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