Wall Street opened flat on Wednesday, over stronger-than-expected GDP figures, as investors looked ahead to the Federal Reserve’s policy decision and major tech earnings. In the early hours of trading, the Dow Jones Industrial Average climbed 44.9 points, or 0.10%, to 44,677.9. The S&P 500 gained 10.4 points, or 0.16%, to open at 6,381.23, while the Nasdaq Composite added 42.1 points, or 0.20%, at 21,140.40.
US GDP data
The US economy expanded at a stronger-than-expected 3% annual rate in the second quarter, driven by improving trade dynamics and a rebound in consumer spending, the Commerce Department reported Wednesday. Gross domestic product (GDP), adjusted for seasonality and inflation, showed broad-based strength across key sectors. Consumer spending rose 1.4%, up from 0.5% in the previous quarter. While exports dipped 1.8%, imports plummeted 30.3%, reversing a sharp 37.9% increase in Q1, contributing to a more favourable trade balance. The upbeat data comes amid months of trade tensions and tariff negotiations led by President Donald Trump. Despite market jitters, the talks have so far avoided the most extreme tariff hikes and coincided with a steady pace of economic growth. The report also offered signs that inflation pressures are easing, though not fully resolved.
Fed rate cut
All eyes are on the Federal Reserve as it prepares to announce its latest policy decision today. As per reports, interest rates are widely expected to remain steady. However, investors are awaiting Fed Chair Jerome Powell’s remarks for hints on the timing of the first rate cut. Current market sentiment leans toward a potential policy easing in September, though some analysts caution that strong economic indicators may delay that timeline. A few even suggest rate cuts might be off the table entirely for 2025. The second-quarter GDP growth came in at a robust 3%, surprising analysts and reinforcing the view that the US economy remains on solid footing. Meanwhile, private payrolls data from ADP revealed 104,000 jobs added in July, outpacing expectations and adding to the argument for holding rates higher for longer. On the global trade front, Donald Trump has reignited tensions by imposing a 25% tariff on Indian imports effective August 1. He has also hinted at further actions targeting Russian energy exports.