FX.co ★ US Stocks Pare Gains on Stagflation Warning

On Wednesday, U.S. stock markets experienced a predominantly downward trend, influenced by the Federal Reserve's warnings about stagflation risks and concerns over persistent tariffs imposed by the U.S. government. The S&P 500 declined by 0.4%, while the Nasdaq 100 fell by 0.8%. Conversely, the Dow Jones Industrial Average remained relatively stable. The Federal Reserve, as anticipated, left interest rates unchanged and continued with its current pace of balance sheet reduction. However, the central bank emphasized increased uncertainty in the economic environment, highlighting the risk of inflation and higher unemployment due to trade barriers, despite recent data suggesting a strong economic foundation.

Meanwhile, President Trump indicated that he would not reduce tariff levels in advance of forthcoming negotiations with the Chinese delegation focused on trade discussions. Alphabet's stock took a significant hit, dropping over 8%, following Apple's announcement of its search for AI-driven search engines for the Safari browser, which implies a potential conclusion to its partnership with Google. Additionally, AMD experienced a slight decrease in its stock value after releasing its financial results.