After a session largely in positive territory, the Dow Jones ended down 0.38% and the broad S&P500 fell 0.12%. Only the tech-heavy Nasdaq showed a slight gain of 0.15%.
“Powell was more firm than investors expected,” summed up Angelo Kourkafas, an analyst at Edward Jones, in statements to AFP.
According to the Fed chairman, “there are still many, many uncertainties to clarify” regarding the repercussions of the new tariffs imposed by Donald Trump on U.S. imports.
Regarding negotiations with U.S. trade partners, “we’re still far from seeing where things are going,” despite “a very dynamic period,” said Powell, after the conclusion of the two-day Federal Open Market Committee (FOMC) meeting.
As expected, the central bank left the benchmark interest rate unchanged, at the level it has been since December, in the range of 4.25% to 4.50%.
Most analysts had anticipated a rate cut during the September FOMC meeting, but now there is more uncertainty about the outcome, according to the CME’s analyst sentiment tracker.
Currently, two of the 112 FOMC members voted against maintaining the current rate, a level of dissent unseen for more than 30 years.
“Yet the majority of the committee maintained the wait-and-see approach to which we’ve grown accustomed,” Koukafas noted.
At the start of the session, investors were excited by indicators showing an economy in better shape than expected.
Economic activity progressed at a three percent annualized rate in the second quarter, above the 2.3% anticipated by MarketWatch analysts for this quarter’s gross domestic product (GDP).
This difference was more significant as the GDP had contracted 0.5% in the first quarter, due to a rush on imports in an effort to delay the impact of increasing tariffs as much as possible.
Also released today, the monthly report from ADP Research Institute and the Stanford Lab showed the creation of 104,000 private sector jobs in July in the U.S., exceeding the 76,000 projected by analysts.
