US Stocks Plunge as Fed Holds Rates Amid Inflation Concerns

The US stock market experienced a sharp decline on Wednesday as investors reacted negatively to the Federal Reserve's decision to keep interest rates unchanged. The Dow Jones Industrial Average fell by 1,152 points, marking its biggest one-day decline since April 2025. This move was unexpected by some, as three members of the Federal Open Market Committee had favored a quarter-percentage-point increase.

The Treasury yields climbed sharply after the decision, with the benchmark 10-year Treasury yield rising above 4.66% and the 30-year Treasury yield climbing to its highest level since 2007 at over 5.2%. This increase in yields is causing concerns about inflation, which remains above the central bank's target.

Rising oil prices also added to the inflation worries, with West Texas Intermediate crude settling more than 6% higher at $84.46 per barrel. Semiconductor stocks continued their decline, with the iShares Semiconductor ETF (SOXX) dropping 5.5%. Micron Technology and KLA each declined around 10%, while AMD lost 5.5%

Despite the market sell-off, earnings have remained strong, with analysts expecting aggregate S&P 500 second-quarter earnings to grow about 40% from a year earlier. Major technology companies such as Microsoft and Meta Platforms are scheduled to report results after Wednesday's closing bell, providing further insight into AI spending trends.