On May 7, 2025, traders were busy on the floor of the New York Stock Exchange (NYSE) as they tuned in to a press conference led by US Federal Reserve Chair Jerome Powell following the Fed’s rate announcement.
Wednesday evening saw little change in the Federal Reserve system as it decided to keep interest rates steady, citing rising inflation and a looming risk of unemployment.
S&P 500 Futures dipped by 0.1%, while the Dow Jones industrial average experienced a slight drop of 55 points, also 0.1%. Nasdaq-100 Futures were down just a bit as well.
The Fed opted to maintain its benchmark overnight borrowing rates in the 4.25% to 4.5% range, a move anticipated by many. This level has remained consistent since the bank’s December meeting.
“We’re seeing more uncertainty regarding the economic outlook,” the Fed stated in a follow-up announcement. “The committee is closely monitoring risks from both sides of its dual mandate and recognizes the heightened concerns around unemployment and inflation.”
Despite this, Chairman Powell has ruled out any immediate rate cuts to mitigate impacts from President Trump’s tariffs, asserting that inflation remains “beyond target.” He noted, “We won’t fully understand the correct response until more data comes in,” during his Wednesday press conference.
Chris Zaccarelli, the chief investment officer at North Light Asset Management, expressed concerns, stating, “The Federal Reserve is facing constraints. There are fears about inflation and a potential recession that could lead to increased unemployment, pulling them in conflicting directions.” He added that market fears of a recession are intensifying. “If several trade agreements aren’t made before the tariff suspensions end, we might see the markets slip again, similar to what we saw in early April.”
S&P 500 managed to gain over 3% earlier after the Fed’s announcement, finally ending up 0.43%, largely driven by a surge in Nvidia shares. This boost followed a Bloomberg report suggesting that the Trump administration was considering lifting trade barriers on chips. Other tech stocks in the Nasdaq Composite were also affected, with a 0.27% bump for blue chips and the Dow Jones Industrial Average rising by 0.7%.
Investors are now eyeing more economic indicators due to be released on Thursday. The weekly unemployment claims data will be unveiled before the market opens, along with a New York Fed report on consumer expectations scheduled for later that day.
This busy revenue week continues on Thursday, with Conoco Phillips, along with media giant Warner Bros Discovery, set to report results before the markets open. Meanwhile, legacy media firm Paramount Global and others, including travel agencies like Expedia, will share their earnings after the market closes.
In after-hours trading, stocks like Applovin saw a notable increase of over 13% following the announcement that it exceeded Wall Street forecasts in its quarterly results and decided to sell its mobile gaming segment. Conversely, semiconductor companies faced more than an 11% drop after releasing disappointing guidance.
