Fed Decision Looms as Chip Selloff Deepens

The stock market is bracing for a critical decision from the Federal Reserve on Wednesday, July 29, as investors await word on interest rates amid a deepening selloff in semiconductor stocks. According to analysts and market-pricing data, the Fed is widely expected to hold interest rates steady at 3.5% to 3.75%, but the broader market backdrop remains turbulent.

Semiconductor stocks have become the focal point of market weakness this month, with investors fleeing chip makers over concerns that artificial intelligence spending by major technology companies may not be sustainable. The chip sector's struggles reflect broader anxiety about technology valuations after months of extraordinary gains driven by artificial intelligence enthusiasm.

Market expectations suggest the Fed will maintain its patient stance at the July 28-29 meeting, according to CME Group data showing an overwhelming 97% probability of no rate change. This comes after the Federal Reserve held rates steady at its June meeting while signaling openness to a potential rate increase later in 2026 if inflation pressures persist.

The timing of the Fed announcement matters because it arrives as the stock market grapples with the chip selloff's ripple effects across the broader economy. A hold on rates could provide some relief, though investors will likely scrutinize the central bank's language about future policy moves and its assessment of inflation trends.