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Wall Street closes down sharply after Fed keeps rates unchanged
NBC News • • general
Key Points:
- Wall Street closed sharply lower following the Federal Reserve's decision to keep interest rates steady, with AI-related chip stocks declining amid concerns over heavy capital spending ahead of Microsoft and Meta Platforms' quarterly reports.
- The Fed maintained the benchmark interest rate at 3.50%-3.75%, though three members dissented, preferring a rate hike; investors now anticipate a possible increase in September due to persistent inflation and rising crude oil prices.
- The Nasdaq 100 index fell 2.1%, extending its decline to 11% from the June high, driven by sell-offs in AI-linked stocks amid worries about substantial investments impacting free cash flow.
- Meta Platforms' stock dropped 4% after raising its 2026 capital expenditure forecast, while Microsoft gained 0.6% following better-than-expected quarterly cloud revenue, signaling positive returns from AI infrastructure spending.
- The S&P 500 declined 1.52%, the Nasdaq fell 1.74%, and the Dow Jones dropped 2.19%, with most sectors down; despite strong earnings forecasts, the market faces pressure from inflation, geopolitical tensions, and increased competition from China in AI and chip development.
