Stocks Trim Losses as Fed Holds Off on Rate Hike: Markets Wrap

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July 29, 2026 - 21:10

5 minutes

(Bloomberg) — Wall Street traders paced a bounce in stocks from session lows after the Federal Reserve held off on raising interest rates as it assesses the impacts of the Iran war on inflation.The decision brought a degree of relief to investors worried about a surprise hike in response to a resurgence in oil prices that has raised concerns about inflationary pressures. The S&P 500 pared most of a decline that had earlier exceeded 1%. Treasury two-year yields, which are more sensitive to imminent Fed moves, retreated. The dollar fell.While Fed officials led by Chairman Kevin Warsh strongly emphasized their commitment to tackling inflation, the central bank’s statement was identical to the one issued following their June meeting. The vote marked the fifth straight time officials have opted to leave rates unchanged.“Keeping rates on hold instead confirms that Warsh is putting a little space – conceptually and in time – between reasserting credibility on inflation and assessing whether this then requires operationalizing in the form of one or more rate increases,” said Krishna Guha at Evercore.The decision also represents a choice to act in a way that is relatively more predictable and systematic in its response to incoming information rather than act in an unpredictable way in order to hammer home a point, Guha noted.The Federal Open Market Committee voted 9-3 to hold the benchmark federal funds rate in a range of 3.5% to 3.75%. Dallas Fed President Lorie Logan, Cleveland’s Beth Hammack and Minneapolis Fed chief Neel Kashkari dissented in favor of raising rates by a quarter percentage point.Brent crude hit $90 as President Donald Trump told Fox News the US would hit Iran hard after a recent attack that targeted a military base in Jordan. The latest clashes underscore how far Washington and Tehran are from formally restarting peace negotiations, let alone agreeing on a deal to permanently end their war and revive the Strait of Hormuz.Meantime, the tech sector came under intense volatility as despair and frustration spread across the South Korean retail-investing community as stocks cratered again Wednesday, extending the decline in the nation’s key equity index this month to a record 33%.The Kospi Index slid as much as 13% in a hectic morning session, triggering a circuit breaker. SK Hynix Inc. earmarked at least $31 billion in capital spending this year after reporting a six-fold surge in quarterly profit, a record outlay that coincides with fears about investments in AI capacity.“The decline in the chip stocks and the dramatic fall in South Korea’s Kospi are clear warning signs for US investors,” said Matt Maley at Miller Tabak. “If history is any guide, these developments could be important examples of a canary in the coal mine.”Corporate Highlights:Ford Motor Co. raised its profit outlook for the second time this year as consumers continue to snap up the automaker’s high-margin sport-utility vehicles. Procter & Gamble Co. gave a conservative outlook and its results missed estimates, highlighting the challenges the maker of Downy fabric softener and Febreze air fresheners faces as consumers retrench. Caterpillar Inc. fell after Baird cut its recommendation on the industrial giant, warning of a growing push to restrict the data-center buildout that has driven much of the company’s recent growth. Humana Inc. spent more on medical expenses in the second quarter in its insurance segment than Wall Street anticipated, the latest worrying sign for an industry managing increasing costs. Biogen Inc. reported earnings that beat analysts’ expectations as sales of newly acquired kidney and eye-disease drugs helped offset declining revenue from multiple sclerosis medicines. What Bloomberg Strategists say…“Investor reaction to Meta and Microsoft earnings will tell us a lot about how the consensus view on AI spending has shifted.”—Sebastian Boyd, Macro Strategist, Markets Live. For the full analysis, click here.Some of the main moves in markets:StocksThe S&P 500 fell 0.2% as of 3:09 p.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average fell 1.4% The MSCI World Index was little changed Philadelphia Stock Exchange Semiconductor Index fell 1.4% CurrenciesThe Bloomberg Dollar Spot Index fell 0.4% The euro rose 0.5% to $1.1444 The British pound rose 0.5% to $1.3358 The Japanese yen rose 0.3% to 163.41 per dollar CryptocurrenciesBitcoin rose 0.6% to $64,212.02 Ether fell 0.3% to $1,910.45 BondsThe yield on 10-year Treasuries advanced four basis points to 4.64% Germany’s 10-year yield advanced six basis points to 3.16% Britain’s 10-year yield advanced nine basis points to 5.04% The yield on 2-year Treasuries declined five basis points to 4.24% The yield on 30-year Treasuries advanced eight basis points to 5.17% CommoditiesWest Texas Intermediate crude rose 6.5% to $84.42 a barrel Spot gold rose 1.7% to $4,097.56 an ounc ©2026 Bloomberg L.P.