Home / Business and Economy / Fed Shocks Markets: Rates Steady, Inflation Fears Soar
Fed Shocks Markets: Rates Steady, Inflation Fears Soar
30 Jul
Summary
- US market crashed after Fed left interest rates unchanged.
- Fed Chair's comments suggest a prolonged fight against inflation.
- Microsoft stock surged 9% on positive earnings and guidance.
The US market experienced a significant sell-off on Wednesday, July 30, 2026, as the Federal Reserve announced its latest interest rate decision. The Federal Open Markets Committee (FOMC) voted 9-3 to keep interest rates steady between 3.5% and 3.75%. This decision alone did not trigger the market's sharp decline.
The market's apprehension intensified following commentary from Fed Chair Kevin Warsh. He stated that the Fed lacks a 'magic wand' for rapid inflation reduction, suggesting an extended and challenging effort to restore price stability. This lack of forward-looking guidance on future rates disappointed Wall Street.
As a consequence of the Fed's stance and commentary, US bond yields surged. The 10-year bond yield returned to 4.7%, while the 30-year note yield climbed to 5.2%, its highest point since 2007. The US Dollar saw a decrease in value, and Gold and Silver experienced modest gains.
In corporate news, tech giants Microsoft and Meta released their earnings. Microsoft exceeded expectations with strong guidance, leading its stock to rise 9% in extended trading, despite a drop in free cash flow. Conversely, Meta missed earnings per share targets, reported subdued guidance, and saw a decrease in daily active people and free cash flow, causing its stock to fall.
