Trading Day: Fed almost incidental to market swirl

ORLANDO, Florida, Jan 28 (Reuters) - The dollar snapped higher and Wall Street wobbled on Wednesday, but not before the S&P 500 broke above 7,000 points for the first time, after the Federal Reserve kept interest rates on hold and flagged rising inflation risks.

More on that below. In my column today I look at who the most likely candidates are to reduce their exposure to U.S. assets as a 'Sell America' narrative gathers momentum. Countries with big nominal holdings, or countries with ?outsized exposure to U.S. markets?

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

1. VIEW-Fed holds rates steady ?as expected, but seeselevated inflation 2. Be careful what you wish for on a weaker dollar - MikeDolan 3. Dire year for dollar has little light at end ?of tunnelin 2026 4. Amazon (AMZN) axes 16,000 jobs as it pushes AI and efficiency 5. The future of AI will be ?written in nuts and bolts: ?AnujRanjan

Today's Key Market Moves

* STOCKS: S&P 500 breaks 7,000 points barrier, South Koreaand Brazil extend powerful rallies to new peaks. Europe in thered though. * SECTORS/SHARES: In after-hours trade following earningsreports, Microsoft (MSFT) shares -7%, Meta +10%, ?Tesla +4%, IBM (IBM) +11%. * FX: Dollar's best day since mid-November, euro's worstday since August. * BONDS: Treasury ?yields rise as much as 3 bps, curve bearsteepens. Long-dated JGB yields dip again. * COMMODITIES/METALS: Oil at fresh 4-month high, gold +4%through $5,300/oz, silver +3% today.

Today's Talking Points

* Hawkish veer to Fed's steer

"An absolute snoozefest." That's how TS Lombard's Dario Perkins summed up ?today's Fed meeting and Chair Jerome Powell's press conference, as the ?central bank kept rates ?on hold as expected. The steer was slightly hawkish - inflation remains elevated and the job market looks a bit sturdier - but there was little market reaction.

Traders still expect another quarter point cut by July, but aren't fully pricing in another one ?after that. This fits with Powell's view that policy is probably at the higher end of the neutral range. Chances of the next move being a hike? No one's "base case", Powell says.

* U.S. reaffirms 'strong dollar' policy

U.S. President Donald Trump, Treasury Secretary Scott Bessent and others have weighed in on the dollar's travails, and investors are nervous the selloff snowballs into a rout. Policymakers seeing their currencies supercharge in value will be too.

The dollar got some respite on Wednesday, but the selling pressure is likely to return. It is still overvalued on a long-term, fundamental ?basis, although by ?how much is open to question. The last 24 to 48 hours have seen huge swings in FX volatility. Investors should expect more of that too.

* 3 out of 4 ain't bad

U.S. tech results are rolling in, and so far, it's ?looking good - investors cheered Meta, Tesla and IBM (IBM), but not Microsoft (MSFT). Belief in the economic transformative power of AI is broadly intact. But there are a few chinks of shade amid the blinding light.

First, the downside of a productivity boom - job losses. Amazon (AMZN) and UPS have announced huge layoffs, others will likely follow. Second, big tech has lagged in recent months, ceding market leadership to other sectors. Many leading tech stocks remain well off their all-time highs - a sign of fatigue, or room to play catch up?

What could move markets tomorrow?

* Japan consumer confidence (January) * Chinese Premier Li Qiang meets UK Prime Minister KeirStarmer * Euro zone sentiment indices (January) * ?Sweden interest rate decision * U.S. Treasury auctions $44 billion of 7-year notes * U.S. weekly jobless claims * U.S. durable goods (November) * U.S. trade (November) * U.S. earnings (busiest day of the season), includingApple, Visa, Mastercard, Caterpillar, SAP, Blackstone

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Opinions expressed are those of the author. They do not reflect ?the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Jamie McGeever; Editing by Bill Berkrot)