S&P 500 Bulls Return Despite Stiff Powell and Hawkish Fed Interest Rates
U.S. equity indices, with S&P 500 up by 0.43% end the day in the green after volatile swings driven by central bank messaging and semi...
Quick overview
- U.S. equity indices ended the day in positive territory, with the S&P 500 up by 0.43% after a volatile trading session influenced by central bank messaging and semiconductor news.
- The Federal Reserve held interest rates steady, but Chair Jerome Powell's comments on economic uncertainty tempered initial market enthusiasm.
- A potential lifting of global chip export restrictions by President Trump boosted sentiment in the tech sector, contributing to late-day gains.
- Despite today's gains, investors remain cautious as they digest Fed signals and prepare for upcoming inflation and trade data.
Live SP500 Chart
U.S. equity indices, with S&P 500 up by 0.43% end the day in the green after volatile swings driven by central bank messaging and semiconductor headlines.
Stocks Recover After Choppy Session
After a turbulent trading day marked by conflicting investor sentiment around Federal Reserve policy and trade developments, U.S. stock markets managed to end in positive territory. Early optimism surrounding the Fed’s rate announcement gave way to caution during Fed Chair Jerome Powell’s press conference, where he emphasized heightened economic uncertainty and reiterated a data-driven policy stance. This tempered initial market enthusiasm, causing a mid-session dip.
Semiconductor Rally Powers Late-Day Gains
Just as markets appeared to falter, news broke that President Donald Trump may consider lifting global restrictions on chip exports. This announcement sharply boosted sentiment in the tech sector, particularly among semiconductor stocks, which led a broader market rebound in the final hours of trading. The news reignited investor risk appetite, helping the S&P 500 close at 5,631 points.
S&P 500 Chart Daily – Buyers Face the 100 SMA
From a technical standpoint, the index remains in a tug-of-war. While it closed strong, it continues to face resistance from the 100-day simple moving average (SMA). A clear break above this level, along with the 50-day SMA, would likely confirm a return to a bullish trend.
Fed Stays on Hold, Market Digests Hawkish Nuance
The Federal Reserve held interest rates steady, as expected, but the tone from Powell suggested elevated risks to both inflation and employment. His repeated emphasis on uncertainty and the Fed’s patient approach dampened hopes for a June rate cut, with markets now assigning a lower probability to near-term easing.
Despite the hawkish overtones, Powell offered a generally positive view of the U.S. economy, which may have reassured some investors. He noted that the economy remains resilient and that inflation, while still somewhat elevated, has shown signs of moderation in specific areas like housing and services.
Stock Market Recovers After Early Week Losses
- Dow Jones Industrial Average rose +284.97 points (+0.70%), closing at 41,113.97, leading the pack with strong gains in industrials and financials.
- S&P 500 gained +24.37 points (+0.43%) to settle at 5,631.28, with broad participation across sectors.
- NASDAQ Composite edged up +48.50 points (+0.27%) to 17,738.16, with tech stocks showing modest recovery amid rate-related uncertainties.
- Russell 2000 rose +6.47 points (+0.33%), closing at 1,989.66, suggesting a tentative return of risk appetite in small-cap names.
Despite today’s gains, caution remains as investors digest Fed signals and brace for upcoming data on inflation and trade disruptions. Market sentiment was buoyed by the Fed’s patient tone, though underlying macro risks remain elevated, keeping overall positioning cautious.
Dollar Strengthens Amid Shifting Rate Expectations
In the wake of the Fed’s statement and Powell’s comments, the U.S. dollar appreciated sharply, gaining nearly 1 cent overall. This move reflects shifting expectations in the bond market, where traders are scaling back bets on imminent policy easing. The firmer dollar signals a market increasingly aligned with the Fed’s caution, rather than prematurely pricing in aggressive cuts.
Fed Leaves Rates Steady, Flags New Risks
- The Federal Reserve held its target range unchanged at 4.25–4.50%, as widely expected.
- The FOMC noted that the economy is still expanding at a “solid pace.”
- Swings in net exports were cited as distorting Q1 GDP data.
- Labor market conditions remain “solid,” although the Fed acknowledged rising dual risks: both higher inflation and higher unemployment.
- Notably, there were no dissents, indicating consensus on the need for a holding pattern amid growing uncertainties.
Powell’s Statement: Tariffs in Focus, No Rush to Act
- Chair Jerome Powell said the economy remains solid, and monetary policy is “well positioned to respond” to emerging challenges.
- He highlighted a sharp drop in business and household surveys, signaling weakening sentiment.
- Tariffs were a major focus: Powell admitted that imposed tariffs have been larger than expected and could trigger temporary or persistent inflation depending on policy evolution.
- The Fed’s goal is to prevent any tariff-driven price rise from becoming entrenched, while maintaining balance with its employment mandate.
- Powell stated the Fed has time to wait and assess how the economic picture evolves before adjusting policy.
Powell Q&A: Elevated Uncertainty, No Clear Path Yet
- Powell emphasized the uncertainty surrounding tariff impacts, saying it’s too early to understand their full effect on the economy.
- He reiterated that the economy has been resilient, but downside risks have increased.
- On the possibility of rate cuts, Powell remained noncommittal: there are scenarios where the Fed wouldn’t cut at all, and others where it would be appropriate.
- Housing and non-housing service inflation have shown some “decent” readings, but there’s still a lot the Fed doesn’t know.
- Powell concluded that “the costs of waiting are fairly low,” suggesting no urgency for immediate rate moves unless data shift decisively.
Conclusion: Markets saw modest relief as the Fed struck a cautious, measured tone while keeping interest rates unchanged. However, Powell’s repeated emphasis on uncertainty—especially around tariffs and inflation—suggests the central bank remains firmly in wait-and-see mode. While today’s equity gains reflect a temporary reprieve, traders and investors will likely remain on edge as future inflation prints, trade developments, and earnings guidance shape the Fed’s next move.
S&P 500 Live Chart
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