Fed Rate Decision Sparks Bond Selloff, AI Spending Takes Center Stage

The week ended July was marked by significant market fluctuations. The Federal Reserve's decision to maintain its benchmark interest rate at 3.50%-3.75% did little to calm investors, with Treasury yields climbing to levels not seen since 2007.

Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan each voted for a quarter-point hike, the first time since September 2016 that three policymakers dissented in the same direction. Fed Chair Kevin Warsh described the split as 'a good family fight,' but declined to specify what would trigger a rate hike.

The bond market responded with a selloff, with the 30-year yield rising 12 basis points to 5.21%. The Dow Jones Industrial Average plummeted 1,153 points on Wednesday, its worst session in over a year.

In earnings news, Microsoft and Amazon exceeded expectations, while Meta Platforms Inc. reported disappointing results. Apple Inc. fell 8% after reporting record revenue but guidance that was seen as conservative due to 'a 100-year flood' of memory pricing.