The main U.S. equity indexes opened higher and bounced about 45 minutes into the Fed Day trading session on more solid if unspectacular incoming economic data.
A broad though bumpy rally faltered after the FOMC met market expectations but defied President Donald Trump and held steady the target range for the federal funds rate at 4.25% to 4.50%.
In its post-meeting policy statement, the Federal Open Market Committee acknowledged that volatility in net exports is affecting incoming data and that growth moderated during the first six months of 2025.
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At the same time, members noted low unemployment and a solid labor market. And inflation is still “somewhat elevated.”
“If you move too soon,” explained Fed Chair Jerome Powell, “you wind up maybe not getting inflation all the way fixed and you have to come back. If you move too late, you might do unnecessary damage to the labor market.”
Two members of the committee – Fed Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman – dissented from the decision, the first time that’s happened since 1993.
On the wait-and-see front
As for the tariffs driving so much inflation and other uncertainty, President Trump is sticking to his current August 1 deadline to reach agreements with trading partners including Mexico, Canada, South Korea, Taiwan, India, Brazil, Switzerland and Taiwan.
U.S. and Chinese officials are negotiating under a separate August 12 deadline.
Meanwhile, the Bureau of Economic Analysis said gross domestic product (GDP) expanded at an annual rate of 3% during the second quarter, though below-the-surface data suggest all is not as well as it seems.
“Much of the gain was driven by a decline in imports,” explains Gina Bolvin of Bolvin Wealth Management Group, “which artificially boosts net exports in GDP accounting.” Bolvin cites final sales to domestic purchasers as primary evidence the economy “is growing at a slower pace than the headline implies.”
Bolvin concludes that with inflation still elevated and growth uneven, Powell and company “will likely maintain current policy and wait for more consistent signals before considering rate cuts.”
ADP said private employers added 104,000 jobs in July, better than a Bloomberg-compiled forecast of 76,000. And the National Association of Realtors Pending Home Sales Index (PHSI) was down 0.8% vs a FactSet-compiled consensus expectation for a 1.6% decline.
FedWatch reflected only a 45.1% probability the Fed will cut interest rates by 25 basis points in September, down from 63.3% Tuesday.
By the closing bell, the Nasdaq Composite had inched back up 0.2% to 21,129, but the S&P 500 was down 0.1% to 6,362 and the Dow Jones Industrial Average was off 0.4% to 44,461.
COIN stock enjoys a JPM approval stamp
He’s been one of the loudest voices in favor of old-school ideas such as central bank independence, and he’s consistently criticized cryptocurrency using words and terms like “fraud” and “Ponzi scheme.”
But JPMorgan Chase (JPM, +0.9%) CEO Jamie Dimon hasn’t survived as long as he has in a job like his because of his great success fighting massive trends.
Indeed, JPM is likely to become the world’s first trillion-dollar bank – and a lot of its growth is due to deals like the one it announced Wednesday to partner with Coinbase Global (COIN, +1.6%) to support crypto purchases with credit cards.
“We believe leading U.S. banks see Coinbase as the leading blockchain financial infrastructure for accessing liquidity and enabling customer access,” writes Bernstein analyst Gautam Chhugani.
Chhugani adds that “JPM opening up digital assets access for its customers is a huge adoption unlock” and “further accelerates Coinbase’s customer acquisition.”
The analyst also notes the symbolic importance of the partnership “given the JPM CEO’s critical comments on digital assets in the past.” Chhugani rates COIN stock Outperform (or “Buy”) with a 12-month target price of $510.
Meme stock market awaits Mag 7 earnings
One of the main characters in the GameStop (GME, -0.4%) story continues to buy big blocks of Newegg Commerce (NEGG, -20.0%), but that didn’t stop the new meme stock from suffering a double-digit slide Wednesday.
Price action was more muted where fundamentals are more germane, but, as Louis Navellier of Navellier & Associates notes, an earnings stumble did break the run of new highs Tuesday.
“A few companies either missed their estimate or disappointed in guidance,” Navellier observes, “and the ‘priced for perfection’ market took pause, and all the major indexes pulled back modestly.”
Navellier cites recent earnings misses from Starbucks (SBUX, -0.2%), Spotify Technology (SPOT, +4.8%) and UnitedHealth Group (UNH, +1.9%) and soft guidance from Visa (V, -0.1%), Boeing (BA, -0.1%), Procter & Gamble (PG, -2.5%) and Merck (MRK, -1.0%).
And yet, “All these may be swept away as far as index performance by the weight of the Megatech reporting this week.”
Market reaction to the Fed decision has been negative so far. We’ll see what happens when Microsoft (MSFT, +0.1%) and Meta Platforms (META, -0.7%) as well as Apple (AAPL, -1.1%) and Amazon.com (AMZN, -0.4%) light up the earnings calendar over the next few days.
“Expectations are high,” Navellier concludes, “and they are key players in the AI narrative with a wide-ranging impact.”