Rollercoaster Ride on Wall Street: Fed Decision Shakes Up US Stocks
US stock markets surge following Federal Reserve's decision.
Steering clear of presidential pressure, the Fed stood firm on not tampering with key interest rates. This decision left Wall Street grinning: US indices soared. Unfortunately, the same can't be said for Weight Watchers, who took a nose dive after filing for bankruptcy.
In a breath of fresh air for US stock exchanges, the Fed opted to keep interest rates as they were, much to the relief of investors. The US government also announced plans to replace a contentious AI chip export regulation, further benefiting the market. As a result, the prestigious Dow Jones Index of blue-chip stocks sailed 0.7% higher, ending at 41,113 points. The tech-heavy Nasdaq swelled 0.3%, reaching 17,738 points, and the comprehensive S&P 500 rose 0.4%, settling at 5,631 points.
In the heat of trading, stocks took a sudden plummet. Hours prior, Trump hinted at maintaining tariffs against China at a steep 145%. The Fed, as anticipated, left interest rates untouched. In justification, they stated that the risks of both higher inflation and unemployment had heightened. Nonetheless, Federal Reserve Chairman, Jerome Powell, emphasized that the distractions from the White House had no impact on the central bank's work: "We've got the flexibility to wait and we're in no hurry."
The Fed deemed clarity on the impact of the U.S.-China trade conflict essential before considering reduced interest rates, which Trump has urged repeatedly. This could lead to either interest rate cuts or maintaining the status quo, depending on the economy's development, according to the Fed chairman. Ellen Hazen, of F.L. Putnam Investment Management, elaborated on the Fed's stance: "The explanation makes it clear to the White House that their recent measures have complicated the economic environment. The Fed states that the risk of higher unemployment has increased and the risk of higher inflation has increased. Though the Fed hasn't directly attributed this to the tariffs, anyone looking at it will understand that's what they mean."
Trade Talks AheadInvestors eagerly await negotiations between economic giants, the US and China, this week in Switzerland. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet Chinese Vice Premier He Lifeng in Geneva. While a trade agreement may still be out of reach, analysts expect lengthy talks and measures from China to support its domestic economy. The Chinese central bank bank has turned to lower interest rates and other monetary easing measures to boost liquidity and stimulate economic growth.
Weight Watchers Goes Bankrupt - Stock Crashes
In the world of individual stocks, Weight Watchers International - following bankruptcy proceedings - suffered a dramatic 43% loss. Once known as Weight Watchers, the diet company faced hard times after a media report detailed Apple's exploration into aligning its Safari browser with AI-powered search engines. Furthermore, US cosmetics firm Coty felt the heat, dropping 11.6% after issuing a profit warning. On the flip side, Walt Disney stocks surged a whopping 10.8% due to impressive revenue and profits in the first quarter, driven mainly by the rising subscriber numbers for streaming services Disney+ and Hulu.
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Sources: ntv.de, ino/rts
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The Fed's decision to maintain interest rates brought relief to investors, as indicated by the rise in major US indices such as the Dow Jones, Nasdaq, and S&P 500. However, Weight Watchers suffered a significant loss of 43% after filing for bankruptcy. Meanwhile, US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are scheduled to meet with Chinese Vice Premier He Lifeng this week for trade talks, and investors are closely watching developments in personal-finance, general-news, crime-and-justice, technology, politics, and business. In addition, US cosmetics firm Coty saw an 11.6% drop after issuing a profit warning, while Walt Disney stocks soared due to impressive revenue and profits driven by streaming services.
