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PrintGLOBAL MARKETS-Wall Street stocks down, Treasury yields up as Fed leaves rates unchanged
BY Reuters | ECONOMIC | 01/29/25 03:11 PM EST(Updates to afternoon US trading, Fed statement)
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Fed leaves rates steady, drops reference to inflation 'progress'
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Wall Street indexes slip; Microsoft
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Europe hits record high after China AI-driven volatility
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Oil prices slide; Brent crude oil futures dip
By Lawrence Delevingne, Marc Jones
BOSTON/LONDON, Jan 29 (Reuters) - U.S. equity indexes dipped and Treasury yields pushed higher on Wednesday after the Federal Reserve held interest rates steady and gave little insight into when further reductions in borrowing costs may take place.
After several months in which inflation data has largely moved sideways, the U.S. central bank dropped from its latest policy statement language saying that inflation "has made progress" towards the Fed's 2% inflation goal, noting only that the pace of price increases "remains elevated."
"Businesses are expanding operations, consumers have a healthy appetite for travel and leisure, and animal spirits are still elevated," Jeffrey Roach, Chief Economist for LPL Financial, said in an email. "These conditions make it difficult for the Fed to cut rates without reigniting broad inflation pressures."
Animal spirits is a term referring to how emotions shape financial decisions.
The Dow Jones Industrial Average fell 0.37%, to 44,683, the S&P 500 lost 0.62%, to 6,028 and the Nasdaq Composite dropped about 0.9%, to 19,560.
European shares had earlier climbed to a record high as
strong results from Dutch chip equipment maker ASML
sent its stock soaring 5.5% and hoisted the wider tech sector
by 2.5%.
The parts of Asia that were not on Lunar New Year holidays
gained overnight too, while Wall Street's three main indices had
been muted ahead of the trio of "Magnificent 7" earnings -
Microsoft
In bond markets, the 10-year U.S. Treasury yield rose 2.2 basis points to 4.571%, while the 2-year note yield, which typically moves in step with interest rate expectations for the Fed, increased 3.1 basis points to 4.236%. European yields were steady, with the ECB expected to cut its rates again on Thursday, while the yen nudged higher to 155.28 per dollar after Bank of Japan meeting minutes pointed to more rate hikes there.
BIG TECH EARNINGS
Attention is now on the mega-cap tech earnings due from
Facebook owner Meta, Microsoft
"While questions remain unanswered, the market is voting
that the innovation that DeepSeek could bring to the ecosystem
will unlikely impact the AI capex cycle and could even lead to
new channel of demand for GPUs (graphics processing units),"
Pepperstone strategist Chris Weston said.
Meta CEO Mark Zuckerberg said on Friday the company plans to
spend as much as $65 billion this year to expand its AI
infrastructure, putting costs above Wall Street estimates.
Microsoft's
Traders were also digesting Trump's latest tariff threats. The White House said he still plans to hit Mexico and Canada with steep tariffs on Saturday and he is "very much" considering some on China during the weekend.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was flat.
Oil prices eased, with Brent crude oil futures dipping to $76.82 per barrel, continuing a recent decline. U.S. West Texas Intermediate crude sagged to $72.88 after a similar slide.
The day's crypto action meanwhile came from the Czech Republic where its central bank Governor Ales Michl said in an interview with the Financial Times he would present a plan to the bank's board on Thursday to buy bitcoin. He added that, if approved, the bank could eventually hold as much as 5% of its 140 billion euro ($146.13 billion) reserves in the cryptocurrency.
Bitcoin was last trading at $103,658, up about 3.3%.
(Reporting by Lawrence Delevingne in Boston and Marc Jones in London. Editing by Tomasz Janowski, Angus MacSwan, Will Dunham and Chris Reese)
