However, Chairman Jerome Powell told reporters in a news conference following the Federal Open Market Committee’s rate decision that the central bank’s rate cut was a “midcycle adjustment,” hinting that further rate cuts later this year were not a sure thing.
That comment led to a 333-point drop on the Dow, its biggest one-day drop since May 31. The S&P 500 and Nasdaq dropped 1.1% and 1.2%, respectively, to end July.
“It was always going to be a tough job for the Fed to be as dovish as stock markets hoped,” Chris Beauchamp, chief market analyst at online trading firm IG, wrote in a note. “The sense of disappointment was almost inevitable.”
In off-hours trading, shares in chip maker Qualcomm fell 7% after it reported its earnings Wednesday and cut its full-year forecast for global smartphone sales. Prudential Financial ’s shares dropped 5.2% after the company posted a slight increase in adjusted operating earnings.
General Motors ’s shares rose 2.9% after the car maker reported second-quarter results that beat expectations. Shares in Verizon Communications rose 1.7% premarket after the company said it added more wireless customers than some analysts expected in its second quarter.
Siemens’s shares fell 4.7% after the German industrial giant reported a drop in its quarterly profit and said a weakening global economic environment was hurting its key industrial businesses.
Royal Dutch Shell ’s shares slid 5.5% after the energy giant said its profit fell. The company cited lower oil and gas prices and weaker refining margins, outweighing a rise in production.
In Asia, both China’s benchmark Shanghai Composite Index and Hong Kong’s Hang Seng fell 0.8%. The latest round of U.S.-China trade talks concluded Wednesday without any compromise, though both sides described the talks as constructive. The next round will be held in September.
U.S. stocks fell Wednesday after Fed Chairman Jerome Powell disappointed investors when he rolled back expectations for future interest-rate cuts…
The 10-year U.S. Treasury yield edged down Thursday to 2.020%, from 2.034% Wednesday. Yields rise when bond prices fall. The WSJ Dollar Index, which measures the currency against a basket of its peers, climbed 0.2%.
In commodities, global benchmark Brent crude fell 1.3% to $64.23 a barrel. Gold dropped 1.5%. The British pound was down 0.4% against the dollar on Wednesday, hovering near historic lows. The Bank of England on Wednesday left interest rates unchanged.
“The real worry is the strength of the pound,” Kerstin Braun, president of international trade-finance firm Stenn, said in a note. “Regardless of the Bank of England’s actions, there will still be a downward pressure on sterling.”
A lower pound rate will benefit U.K. exporters, but the bigger impact across the board is likely to be in raised prices for consumers on imported items such as food and fuel, Dr. Braun said. Data on U.S. manufacturing are also expected Thursday.