The Federal Reserve took centre stage Wednesday, holding interest rates steady while warning that risks to both inflation and employment have increased. The central bank’s statement struck a more cautious tone, complicating the outlook for rate cuts and raising fresh concerns about economic growth. Chair Jerome Powell cited tariff-driven inflation and the potential for rising unemployment, reinforcing the Fed’s wait-and-see stance. Treasury yields and oil prices fell on the news, while US stocks finished mixed in a volatile session. The Dow led gains, lifted by a surge in Disney, as investors balanced Fed caution with ongoing corporate earnings and geopolitical uncertainty.

Key Takeaways:

  • Dow Jumps Nearly 285 Points on Disney Surge: The Dow Jones Industrial Average climbed 284.97 points, or 0.70%, to close at 41,113.97, boosted by an 11% rally in Disney shares. 
  • S&P 500 Climbs in Volatile Session After Fed Warning: The S&P 500 rose 0.43% to 5,631.28 after the Federal Reserve held interest rates steady and highlighted growing risks to both employment and inflation. 
  • Nasdaq Edges Higher as Nvidia Gains Offset Tech Weakness: The Nasdaq Composite added 0.27% to close at 17,738.16. Nvidia rose 3% on reports that the Trump administration plans to lift AI chip restrictions. 
  • Europe Falls on Weak Retail Data and Pharma Tariff Threats: European markets moved broadly lower as investors reacted to soft consumer data and rising concerns over US tariffs aimed at the pharmaceutical sector. The Stoxx 600 dropped 0.5%, led by a 2.2% decline in retail stocks. Germany’s DAX slid 0.57%, France’s CAC 40 lost 0.97%, Italy’s FTSE MIB fell 0.62%, and London’s FTSE 100 dropped 0.44%. Eurostat data showed retail sales declined 0.1% in both the euro area and EU in March, with sharper monthly declines in Slovenia, Estonia, and Slovakia. Italy’s retail sales fell 0.5% on the month, while German industrial orders surprised to the upside with a 3.6% monthly gain. Novo Nordisk rose 1.3% after a first-quarter earnings beat. 
  • Asia Mostly Higher as China Stimulus Trumps Trade Concerns: Asia-Pacific markets ended mostly higher after China’s central bank and regulators introduced new policy support, including plans to cut key interest rates. The CSI 300 rose 0.61%, and the Hang Seng added 0.5% despite a weak April PMI reading of 48.3, which stayed in contraction territory. Japan’s Nikkei fell 0.14%, but services PMI rose to 52.4, suggesting underlying strength. South Korea’s Kospi gained 0.55% and the Kosdaq edged down 0.13%, with both indices reflecting improved risk appetite. Australia’s ASX 200 climbed 0.33% as traders looked ahead to trade talks between US and Chinese officials. Optimism around the upcoming meeting, which includes Treasury Secretary Scott Bessent and other US representatives, helped lift sentiment across the region.
  • Oil Drops as Fed Flags Economic Uncertainty: Oil prices fell as the Federal Reserve’s statement amplified concern about slowing demand. Brent crude declined $1.03, or 1.66%, to settle at $61.12 per barrel, while West Texas Intermediate dropped $1.02, or 1.73%, to $58.07. Despite a 2-million-barrel drop in crude inventories reported by the EIA, gasoline stockpiles rose, raising questions about consumer demand ahead of the summer travel season.
  • Yields Fall on Fed Caution and Growth Fears: The 10-year Treasury yield declined more than 3 basis points to 4.281% after the Fed held rates steady and acknowledged that economic uncertainty had increased. The 2-year yield remained little changed at 3.797%. Traders grew more cautious following Powell’s warning that tariffs could drive up both inflation and unemployment, complicating the path for future rate decisions.

FX Today:

  • EUR/USD Holds Above 1.1300 Despite Pullback: EUR/USD closed at 1.1302, down 0.57% on the day, but remained within its recent range. The pair continues to trade above the 50-day moving average at 1.1027, the 100-day at 1.0708, and the 200-day at 1.0788, all of which support the long-term uptrend. Resistance stands near the 1.1450 to 1.1500 zone, with initial support at 1.1250. A break above 1.1500 would open the path toward 1.1600, while a decline below 1.1250 could turn sentiment more neutral in the near term.
  • GBP/USD Retreats from Highs but Uptrend Intact: GBP/USD fell 0.58% to 1.3291 after reaching a high of 1.3378 earlier in the session. The pair continues to find support at 1.3250, with stronger levels near 1.3100. The 50-day moving average at 1.3046 is still rising, along with the 100-day at 1.2754 and the 200-day at 1.2855, indicating a constructive broader trend. Resistance remains in the 1.3400 to 1.3450 band. While the pair may continue to consolidate in the short term, the technical picture remains bullish as long as key supports hold.
  • USD/JPY Bounces from Support but Faces Selling Pressure: USD/JPY rose 0.98% to 143.81, recovering from earlier lows around 142.40. Despite the intraday rebound, the broader trend remains bearish. The pair is still trading below the 50-day, 100-day, and 200-day moving averages, which stand at 146.50, 150.63, and 149.62. Resistance is seen between 145.50 and 146.00, where selling pressure has emerged repeatedly. Support remains at 142.00 and 140.00. Unless the pair clears the declining moving averages, the outlook will remain negative.
  • USD/CAD Finds Support at 1.3760 but Remains Capped: USD/CAD rose 0.39% to 1.3829, stabilising after multiple sessions of testing the 1.3760 support area. The pair is still trading below its 200-day moving average at 1.4008 and remains under pressure from declining 50-day and 100-day averages at 1.4132 and 1.4238. Short-term resistance sits near 1.3900. While the rebound signals temporary stability, a move below 1.3750 would likely expose further downside toward 1.3600.
  • AUD/USD Sinks After Powell Pushes Back on Rate Cuts: AUD/USD fell 0.96% to 0.6431 after failing to break above the 200-day moving average at 0.6459 for a third straight session. The pair is supported by rising 50-day and 100-day moving averages at 0.6310 and 0.6285, which should provide near-term support around 0.6400 and 0.6350. Fed Chair Powell’s remarks, which ruled out preemptive easing, hurt risk sentiment and weighed on the Australian dollar. Unless the pair closes decisively above the 200-day, upside momentum is likely to remain capped.
  • Gold Pulls Back from Resistance After Multi-Day Rally: Gold declined 1.87% to settle at $3,372 following a sharp rejection near $3,440. The pullback came after a strong multi-session rally but did not break the overall uptrend. The 50-day, 100-day, and 200-day moving averages (at $3,113, $2,933, and $2,766 respectively) continue to rise, providing strong trend support. Immediate downside levels include $3,335 and $3,240. Unless gold closes above $3,440, further consolidation is likely, especially amid mixed signals from the Fed and trade tensions.

Market Movers:

  • Alphabet Slides on AI Search Disruption Fears: Alphabet shares fell 7% after Apple’s Eddy Cue revealed the company is exploring AI-powered alternatives to Google Search in Safari. 
  • Uber Falls After Revenue Misses Estimates: Uber shares declined nearly 3% after first-quarter revenue came in at $11.53 billion, below the $11.62 billion expected. Although the company beat on earnings with 83 cents per share, the revenue miss weighed on the stock.
  • Arista Networks Drops Despite Earnings Beat: Arista fell 5% after narrowly beating revenue expectations. The company posted adjusted earnings of 65 cents per share on $2.00 billion in revenue, ahead of estimates, but guidance was seen as conservative.
  • Lionsgate Surges After Business Split: Lionsgate soared nearly 19% following the full separation of its studio and STARZ units into standalone public companies. The stock also benefited from collapsing its dual-share structure into a single class.
  • Rivian Sinks as Delivery Guidance Is Cut: Rivian shares dropped 6% after the EV maker lowered its full-year delivery target, citing tariff-related risks. First-quarter revenue beat expectations at $1.24 billion, but the guidance reduction overshadowed the results.
  • Disney Pops on Earnings Beat and New Resort Plan: Disney jumped 11% after beating earnings and revenue estimates, raising its full-year outlook, and announcing plans for a new theme park in Abu Dhabi. Streaming subscriber growth also exceeded expectations.
  • Sarepta Plunges on Revenue Forecast Cut: Sarepta dropped 21% after lowering its full-year net product revenue guidance. The company now expects $2.30 billion to $2.60 billion, well below prior estimates.
  • Upstart Tanks on Weak Forecast Despite Beat: Upstart shares sank 10% after issuing a disappointing Q2 revenue outlook. The company did beat on Q1 results, but forward guidance fell short of Wall Street expectations.
  • Charles River Soars on Upgraded Full-Year Outlook: Charles River surged 19% after raising its full-year adjusted EPS forecast. The company now expects $9.30 to $9.80 per share, up from $9.10 to $9.60 previously.
  • Rockwell Automation Jumps on Solid Quarter: Rockwell gained 12% after beating Q2 estimates. The company posted adjusted EPS of $2.45 on $2.00 billion in revenue, both above analyst forecasts.

Markets ended the day with mixed signals as investors processed the Fed’s warning on inflation and employment risks alongside key corporate earnings and trade developments. The central bank’s reluctance to commit to a rate cut added to uncertainty, while falling yields and oil prices reflected shifting expectations. Attention now turns to the upcoming US-China trade talks and economic data releases, which could shape sentiment heading into next week.