Wednesday, July 30, 2025
Markets were floating along reasonably well today. Then Fed Chair Powell started talking about using the Fed funds rate to thwart tariff-led inflation in the U.S. economy, and they all dropped significantly. The Nasdaq manages to squeak back into the green by the close, +31 points or +0.15%, while the other major indexes — the Dow, S&P 500 and small-cap Russell 2000 were all down -0.38%, -0.12% and -0.86%, respectively.
Fed Keeps Rates Steady; Powell Sees Cuts as “Next Step”
Unsurprisingly, the
Federal Open Market Committee (FOMC) today decided to keep interest rates steady at +4.25-4.50%, as they have in all five meetings so far in 2025. While the Fed acknowledged that growth moderated in the first half of the year, unemployment and the labor market were fine, overall. However, it sees inflation and uncertainty elevated.
The difference between today’s monetary policy decision and those released earlier this year was we did not see a unanimous decision to keep rates steady. Christopher Waller and Michelle Bowman — both Fed governors, not regional presidents — opted for a 25 basis point (bps) cut; Fed Governor Adriana Kugler was absent and did not vote.
Fed Chair Jerome Powell, facing consistent heat from President Trump and his supplicants to lower rates, has maintained his “modestly restrictive” policy has kept a good balance between a strong labor market (4.1% unemployment) and controlled inflation (if not yet reaching the +2.0% goal Powell has set). He said, in his presser after the FOMC release, that core Personal Consumption Expenditures were little changed from the start of the year, but that tariffs were beginning to push up inflation metrics.
“Tariffs are starting to show up in consumption prices,” Powell said. This could more clearly viewed from the latest CPI Inflation Rate, which jumped to +2.7% in its last print. The Fed Chair reiterated several times that the one-and-done nature of tariff levying on trade partners won’t lead to outsized inflation “because we’ll make sure those tariffs don’t result in inflation.” This is a bearish signal for those investors looking for signs Powell is ready to cut.
We saw market indexes fall off a table on this news. There was nothing exactly surprising in Powell’s statements, but that they came so easily, so matter-of-factly to him, that likely gave market participants reason to reverse course. But Powell did say, later on in the press briefing, that the Fed’s “next steps will likely be in (the) direction (of rate cuts).”
Cavalcade of Afternoon Earnings Results
Microsoft MSFT shares are up a strong +8% in late trading following the company’s robust fiscal Q4 earnings report after the closing bell. Earnings of $3.65 per share beat the Zacks consensus by 30 cents, +24% year over year. Revenues of $76.4 billion were nicely above the $73.7 billion expected, +18% growth year over year. Its cloud business, Azure, was the big story: up +39% in the quarter to $75 billion.
Meta Platforms META posted even stronger overall results this afternoon, slamming earnings projections: $7.14 per share versus $5.83 anticipated. Revenues were also strongly beyond expectations at $47.52 billion in the quarter, up from the $44.84 billion estimate. Daily Active People (DAP) across all its social media services rose +6% to 3.48 billion in Q2. Revenue guidance for next quarter is well higher than the previous projection. Shares are up over +9% on the news.
Ford Motor Co. F make it a trifecta in beating earnings and sales after today’s close, with Q2 earning per share at 37 cents, 3 cents higher than the Zacks estimate. Revenues crossed over $50 billion from an expected $47.7 billion. Yet shares are down as the company reported the direct tariff exposure has already cost the company $800 million in Q2.
Qualcomm QCOM also beat expectations on its bottom line this afternoon, by 7 cents to $2.77 per share in its fiscal Q3. Revenues of $10.37 billion — the lion’s share coming from iPhone chips, worth $6.33 billion on their own — was a slight miss from the $10.38 billion analysts were expecting. Shares are dropping -4.6% on the news.
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Ford Motor Company (F): Free Stock Analysis Report QUALCOMM Incorporated (QCOM): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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