US Stocks Plummet as Fed Keeps Rates Unchanged Amid Middle East Tensions

US stocks plummeted on July 29 after the Federal Reserve announced it was keeping interest rates unchanged, contrary to expectations of a hike. The Dow Jones Industrial Average fell 2.2% to 51,594.86, while the S&P 500 dropped 1.5% to 7,316.39 and the Nasdaq Composite was down 1.7% at 24,442.94.

The Fed's decision was not entirely unexpected, as three of the 12 members of the Federal Open Market Committee dissented from the move that left benchmark interest rates in the 3.50-3.75% range. However, the absence of a rate hike sparked concerns about inflation and its potential impact on the economy.

The oil market responded to renewed attacks across the Middle East by surging over 8%, pushing expectations for a US central bank rate hike this week even higher. 'There's been a lot of stop-and-start news out of the Middle East, and I think until we get some sort of resolution, that's a bit more durable,' said Bill Merz, head of capital markets research and portfolio construction at US Bank Wealth Management.

Meta missed its earnings expectations on Wednesday, narrowing the range of its forecast for annual capital expenditure as it doubles down on building a fleet of data centres to expand its AI computing power. The tech giant's decision has raised concerns about its sustainability amid intense competition from China in the race to develop advanced chips and cheaper AI models.

South Korea introduced additional curbs on single-stock leveraged exchange-traded funds, including a cap that could limit an individual's investment in such products to 20% of their total investment assets. The pan-European STOXX 600 index fell 0.3%, while Europe's broad FTSEurofirst 300 index dropped 0.4%.