Fed Watch: Markets Calm as GDP Surprises Wall Street/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stock indexes traded flat Wednesday morning as investors await the Federal Reserve’s decision on interest rates. A stronger-than-expected 3% GDP growth sparked bond market movement but raised questions about inflation. President Trump’s new tariffs, including a 25% duty on Indian imports, add complexity to the Fed’s outlook.
Fed Rate Decision Looms – Quick Looks
- S&P 500 up 0.1% after six-day record streak
- Dow Jones rose 21 points, Nasdaq climbed 0.3%
- GDP growth hits 3%, exceeding forecasts by a full point
- Strong GDP tied to drop in imports, not consumer demand
- Fed expected to hold interest rates steady
- President Trump announces 25% tariff on Indian imports
- Additional penalties tied to India’s purchase of Russian oil
- Fed Chair Powell wants more inflation data before acting
- Bond yields rise: 2-year at 3.91%, 10-year at 4.36%
- Corporate earnings mixed: Humana beats expectations, Starbucks rebounds despite weak report
- Old Dominion Freight Line drops 6.2% on soft trucking demand
Deep Look: Wall Street Holds Steady as Investors Await Fed’s Interest Rate Signal
NEW YORK — July 30, 2025
Wall Street opened cautiously on Wednesday, as major U.S. stock indexes drifted amid rising anticipation over the Federal Reserve’s interest rate decision due later in the day. Despite positive GDP growth data, uncertainty around future inflation, interest rate policy, and tariffs left investors hesitant.
The S&P 500 rose 0.1% in early trading after a rare pullback Tuesday ended its record-setting six-day streak. The Dow Jones Industrial Average ticked up 21 points, while the Nasdaq Composite gained 0.3%.
GDP Growth Surprises, But Caution Lingers
According to the Commerce Department’s advance estimate, the U.S. economy grew at an annual rate of 3% in the second quarter — a full point above analyst expectations. But economists warn that the headline number is skewed by a sharp decline in imports, which artificially boosts GDP figures.
“Cutting through the noise… the economy is still chugging along, but it is showing signs of sputtering,” said Brian Jacobsen, chief economist at Annex Wealth Management.
That dynamic places the Federal Reserve in a bind: while growth is strong on paper, underlying trends show cooling consumer demand and weak business investment. The Fed must weigh these indicators against ongoing inflationary pressure, potentially worsened by new Trump-era tariffs.
Trump Tariffs Add Uncertainty
In a Truth Social post Wednesday, President Donald Trump announced a 25% tariff on goods from India, effective August 1, alongside an additional import tax tied to India’s continued purchase of Russian oil.
This new tariff schedule aligns with Trump’s broader efforts to renegotiate trade frameworks globally, including with the EU, Japan, Indonesia, and the Philippines. While the administration says the tariffs will protect U.S. jobs and offset the federal deficit, economists warn that they could raise prices and fuel inflation — complicating the Fed’s decision-making.
“Lowering rates would support the economy, but it could also ignite inflation,” analysts caution, especially if Trump’s tariffs increase import costs for U.S. households and businesses.
Bond Yields Reflect Market Sentiment
Bond markets reacted more visibly than equities. The 2-year Treasury yield climbed to 3.91%, reflecting expectations that the Fed will hold rates steady. The 10-year Treasury yield, often used as a gauge of long-term growth and inflation, edged up to 4.36%.
Fed Chair Jerome Powell has reiterated that the central bank is waiting for more data on how tariffs and other external pressures will impact the broader economy before adjusting rates further. After rate cuts late last year, the Fed has paused any moves so far in 2025.
Corporate Earnings: Hits and Misses
Quarterly earnings remain a key focus. Humana led gains with a 4.9% stock jump after beating profit forecasts and raising its full-year outlook. Starbucks, despite reporting lower-than-expected earnings, rose 1.6% on optimism around store improvements and new product lines like its cold foam protein drink.
Still, not all results were rosy. Old Dominion Freight Line dropped 6.2%, citing continued softness in freight demand and a persistently tough economic environment. CEO Marty Freeman called it “a longer-than-anticipated downturn.”
“Companies must deliver strong results to justify recent stock gains,” analysts note, pointing to concerns over valuation and future growth.
Global Market Overview
Stock markets overseas posted mixed results. Hong Kong’s Hang Seng Index fell 1.4%, reflecting ongoing instability in the region. Meanwhile, South Korea’s Kospi rose 0.7%, buoyed by semiconductor optimism. European markets showed slight gains ahead of the Fed decision.
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