Fed Plays It Safe as U.S. Stocks Dip Amid Inflation Concerns

U.S. stocks closed lower on Wednesday despite the Federal Reserve's steady interest rates and soothing remarks by Chair Jerome Powell. Technology stocks led the decline, with Nvidia and Microsoft dropping amid concerns about inflation and market response to President Trump's policies.

On Wednesday, U.S. stocks ended lower, though they were above the day's lows, after the Federal Reserve maintained steady interest rates as predicted. Fed Chair Jerome Powell's calming comments helped ease investor nerves, but technology shares remained a significant drag on the S&P 500.

Nvidia saw a 4.1% fall, while Microsoft closed down 1.1%, largely due to a tech sector selloff earlier that week, prompted by Chinese startup DeepSeek's launch of AI models. The Nasdaq dropped over 1% in afternoon trading, trailing the Fed's statement, which noted inflation remains elevated without citing progress toward the 2% goal.

Despite the Fed's non-action on rates, investors are cautious about potential policy changes under President Trump, particularly regarding tariffs that may heighten inflationary pressures. Microsoft's after-hours reports highlighted slower-than-expected Azure growth, even as the company's overall revenue surpassed forecasts.

(With inputs from agencies.)