S&P Ends Flat After Early Gains Fade; Dow and Nasdaq Drift on Light Trading Volume

The S&P 500 finished Wednesday almost where it began, surrendering intraday gains after Federal Reserve Chair Jerome Powell highlighted looming goods‑price inflation tied to President Donald Trump’s newly announced tariffs.

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As anticipated, the Federal Open Market Committee left benchmark borrowing costs unchanged and its statement still implied two rate cuts in 2025, though a growing minority of officials now projects no easing at all.

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Policymakers also nudged their longer‑run outlook, penciling in a single quarter‑point reduction in each of 2026 and 2027, a slower glide path than previously signaled.
Equities had traded higher before Powell’s news‑conference remarks, and Treasury yields had fallen, but both moves reversed while he spoke, underscoring traders’ sensitivity to any hint about inflation’s path.
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“Powell made it clear the committee will not adjust monetary policy until it understands exactly how the tariffs will flow through to consumer prices,” said Peter Cardillo, chief market economist at Spartan Capital Securities. Cardillo added that climbing yields and the timeline for tariff effects helped drain risk appetite late in the session.
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Geopolitical tension compounded caution, with investors tracking events in the Middle East and debating whether the United States might become more directly involved in the Israel‑Iran aerial conflict.
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Iranian Supreme Leader Ayatollah Ali Khamenei rejected Trump’s demand for unconditional surrender, prompting the president to declare his patience had expired, though he stopped short of outlining an immediate response.
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Within the S&P 500, energy shares fell hardest, dragging that sector lower, while information‑technology names led advancers thanks to resilient chip and software stocks.
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The Dow Jones Industrial Average slipped 44.14 points, or 0.10 percent, to 42,171.66; the S&P 500 inched down 1.85 points, or 0.03 percent, to 5,980.87; and the Nasdaq Composite added 25.18 points, or 0.13 percent, to 19,546.27.
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Earlier in the session, Labor Department data showed initial jobless claims declined last week yet remained consistent with the slower hiring trends evident throughout June, reinforcing the sense that labour‑market momentum is cooling.
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Sahak Manuelian, managing director of equity trading at Wedbush Securities, said Powell’s comments echoed prior guidance: inflation remains above target, tariffs are a wildcard, and absent protectionist measures the chair would have already started cutting.
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Among individual movers, shares of Circle Internet, the company behind the USDC stablecoin, jumped 33.8 percent after the Senate approved legislation establishing a regulatory framework for dollar‑backed crypto tokens.
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Nucor climbed 3.3 percent when the steelmaker’s second‑quarter profit outlook beat Wall Street’s consensus, signaling steady demand across construction and industrial end markets despite higher input costs.
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Market breadth was modestly positive; on the New York Stock Exchange, advancing issues outnumbered decliners by roughly 1.28‑to‑1, with 102 stocks hitting new 52‑week highs against 55 registering new lows. On the Nasdaq, 2,613 companies gained while 1,882 fell, producing a 1.39‑to‑1 advance‑decline ratio.
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Aggregate volume across U.S. exchanges totaled 16.48 billion shares, lighter than the 20‑day average of 17.99 billion, suggesting some traders stayed sidelined still awaiting clearer tariff guidance.
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By comparison, Tuesday’s activity exceeded 18 billion shares, underscoring Wednesday’s cautious tone. Many desks reported lighter client flows. The Fed’s updated Summary of Economic Projections revealed that several members now view inflation risks as skewed to the upside, chiefly because the summer tariff rollout could lift goods prices faster than services inflation moderates.
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Even so, the median forecast still envisions core personal‑consumption‑expenditures inflation drifting gradually back toward the 2 percent objective by late 2026, allowing policy to ease once confidence strengthens.

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Traders in fed‑funds futures continued to price roughly 45 basis points of easing by December, down from 65 basis points a month earlier, reflecting the chair’s cautious tone.
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Powell reiterated that the committee requires “greater confidence” that price pressures are sustainably falling before lowering rates, emphasizing that a couple of cooler monthly readings are insufficient.
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He acknowledged that wage growth has slowed but argued the labor market remains relatively tight, pointing to still elevated job‑opening ratios and historically low unemployment claims.
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Several analysts highlighted the possibility that tariffs, by boosting import costs, could briefly push headline inflation above 4 percent, forcing the Fed to postpone cuts until early 2026.
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Others countered that higher goods prices might simultaneously weaken consumer spending, dampening growth enough to justify pre‑election easing even if inflation has not fully normalized.

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