US stocks slipped on Thursday, failing to build on a Wednesday rally fueled by reassuring signals from Federal Reserve Chair Jerome Powell after the central bank held interest rates steady.
The Nasdaq Composite (^IXIC) fell about 0.3%, while the S&P 500 (^GSPC) declined by 0.2% and the Dow Jones Industrial Average (^DJI) ended the session just below the flat line. All three major averages saw gains earlier in the trading day before ultimately losing steam.
The Fed’s decision to keep interest rates unchanged on Wednesday was expected on Wall Street, but markets rallied, driven by a sense of relief that prior forecasts for two rate cuts this year held up. Doubts had been rising about the path to rate cuts amid concerns the US economy might buckle under President Trump’s broad plans for tariffs.
In a press conference following the decision, Powell contributed to the good mood. The Fed chair reassured investors that inflation impacts from tariffs will likely be “transitory” and recession risks remain low.
But Powell’s comments came after the Fed, in updated projections, revised upward its forecast for inflation at the end of this year while sharply lowering its forecast for economic growth. Those broader economic sentiments have been weighing on markets for much of the past two months, with both the benchmark S&P 500 and tech-heavy Nasdaq sliding into correction territory.
For his part, Trump — who has largely refrained from weighing in on Fed policy thus far in a U-turn from his first term — looked set to amp up pressure on the central bank.
“The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy,” he posted on social media late Wednesday.
