Fed Holds Steady: Market Reacts to Rates and Economic Outlook

U.S. stocks closed lower on Wednesday following the Federal Reserve's decision to hold interest rates steady. Fed Chair Jerome Powell provided positive economic insights, but technology stocks like Nvidia and Microsoft pulled the S&P 500 down. Concerns over inflation and President Trump's policies persist among investors.

U.S. stocks ended the day on a down note, though avoiding deeper losses, as the Federal Reserve decided to keep interest rates unchanged. Market players had widely anticipated the Fed's move, yet technology stocks, including Nvidia and Microsoft, were significant drags on the S&P 500.

The tech sector's slump gained momentum after the release of AI models from China's DeepSeek, potentially challenging incumbents like Nvidia with cost-effective alternatives. Meanwhile, Fed Chair Jerome Powell maintained his composure, providing reassuring comments on the economy, though recognizing persistent inflationary pressures.

Despite the Fed's steady hand, the market remains on edge, with skepticism about potential rate cuts before year-end. Traders now expect fewer cuts compared to pre-announcement sentiments. Investors also await upcoming quarterly reports from tech giants like Microsoft and Tesla for additional market cues.

(With inputs from agencies.)