Most US stocks fall as hopes weaken for a September cut to interest
rates
[July 31, 2025] By
STAN CHOE
NEW YORK (AP) — Most U.S. stocks slipped on Wednesday after doubts rose
on Wall Street about whether the Federal Reserve will deliver
economy-juicing cuts to interest rates by September.
The S&P 500 edged down by 0.1%, coming off its first loss after setting
all-time highs for six successive days. The Dow Jones Industrial Average
dropped 171 points, or 0.4%, and the Nasdaq composite rose 0.1%.
Stocks felt pressure from rising Treasury yields in the bond market
after the Federal Reserve voted to hold its main interest rate steady.
The move may upset President Donald Trump, who has been angrily lobbying
for lower interest rates, but it was widely expected on Wall Street.
What may have surprised investors more was Fed Chair Jerome Powell’s
pushing back on expectations that the Fed could cut rates at its next
meeting in September. Besides Trump, two members of the Fed’s committee
have also been calling for lower rates to ease the pressure on the
economy, and they dissented in Wednesday’s vote.
But Powell would not commit to a September cut in rates, pointing to how
inflation remains above the Fed’s 2% target, while the job market still
looks to be “in balance.”
A cut in rates would give the job market and overall economy a boost,
but it could also risk fueling inflation when Trump’s tariffs may be set
to raise prices for U.S. consumers. The Fed’s job is to keep both the
job market and inflation in a good place.
Trump on Wednesday announced a 25% tariff on imports coming from India,
along with an additional tax because of India’s purchases of Russian
oil, beginning on Aug. 1. That’s when stiff tariffs Trump has proposed
for many other countries are also scheduled to kick in, unless they
reach trade deals that lower the rates.
“The economy is in good shape, but it’s in an unusual situation,” Powell
said.
He also said that the Fed will receive two months’ worth of data on
inflation, the job market and other economic indicators before it meets
again to vote on rates in September. That could give the Fed more
confidence that the risk of high inflation is no longer bigger than the
risk of a weak job market, a combination that would prod officials
toward lowering rates.
Powell’s comments drove traders to pare back bets on a cut in September.
They now see just a 45% chance of that, down from a nearly 65%
probability a day earlier, according to data from CME Group.
The yield on the two-year U.S. Treasury note rose to 3.93% from 3.86%
late Tuesday. It tends to closely follow expectations for what the Fed
will do with its overnight interest rate.
The 10-year Treasury, which also takes into account longer-term
expectations for the economy and inflation, rose to 4.36% from 4.34%.
[to top of second column] |
Trader Leon Montana works on the floor of the New York Stock
Exchange, Tuesday, July 29, 2025. (AP Photo/Richard Drew)
 A report earlier in the morning
suggested the U.S. economy’s growth was much stronger during the
spring than economists expected. But underlying trends beneath the
surface may be more discouraging.
“Cutting through the noise of the swings in imports, the economy is
still chugging along, but it is showing signs of sputtering,” said
Brian Jacobsen, chief economist at Annex Wealth Management.
On Wall Street, Humana rose 12.4% after the insurer and health care
giant reported stronger results for the spring than expected. It
also raised its forecasts for profit and revenue over the full year.
Video-game maker Electronic Arts climbed 5.7% after likewise topping
Wall Street’s expectations.
Companies are under pressure to deliver solid profit growth. They
need to in order to justify the big jumps in their stock prices
during recent months, which has caused some critics to say the broad
U.S. stock market looks too expensive.
Trane Technologies, whose stock came into the day with a 27.5% gain
for the year so far, tumbled even though it reported a
stronger-than-expected profit for the latest quarter. The heating,
ventilation and air conditioning company’s revenue came up short of
analysts’ estimates, as did its forecast for profit in the current
quarter. It dropped 8.4%.
Freeport-McMoRan, a copper producer with mines around the world,
tumbled 9.5% after Trump signed an executive order to tax imports of
copper at 50%.
Starbucks slipped 0.2% after reporting a weaker profit than analysts
expected as it tries to turn around its operations. The company is
hoping to boost its performance through improved store operations
and new products, including a cold foam protein drink.
All told, the S&P 500 slipped 7.96 points to 6,362.90. The Dow Jones
Industrial Average dropped 171.71 to 44,461.28, and the Nasdaq
composite rose 31.38 to 21,129.67.
In stock markets abroad, indexes were mixed across Europe and Asia.
Hong Kong’s Hang Seng fell 1.4%, and South Korea’s Kospi rose 0.7%
for two of the bigger moves.
___
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
All contents © copyright 2025 Associated Press. All rights reserved |
