US stocks faced a decline on Wednesday after the Federal Reserve decided to leave interest rates unchanged, signaling a cautious approach toward inflation.
Investors reacted to the news with a pullback, while Nvidia’s shares fell sharply due to escalating tensions around its business dealings with China.
The S&P 500 dropped 0.4%, the Nasdaq Composite slid 0.6%, and the Dow Jones Industrial Average lost 81 points, or 0.2%.
Nvidia saw its stock tumble by 5% during the session, marking a significant dip after a strong start earlier in the week.
The drop followed reports from Bloomberg News, revealing that Trump administration officials have considered limiting Nvidia’s chip sales to China, particularly after the release of the DeepSeek AI model.
As a result, the semiconductor giant has now seen a loss of more than 14% for the week.
Meanwhile, the Federal Reserve opted to keep the federal funds rate in the 4.25%-4.5% range, offering a more cautious outlook on inflation.
The central bank acknowledged the stability of the labor market but also noted that inflation remains “somewhat elevated.”
Investors were left with more questions about the Fed’s future stance, with some experts suggesting that the upcoming data between now and March will be crucial for the next major policy decision.
Fed Chair Jerome Powell also addressed questions about his relationship with President Trump, stating that there had been “no contact” since the president’s remarks at the World Economic Forum in Davos, where he called for lower interest rates.
The Fed’s decision also affected the banking sector, with shares of major banks hitting session lows. Both the SPDR S&P Regional Banking ETF and the SPDR S&P Bank ETF dropped around 0.9%.
Among the big banks, JPMorgan Chase and Bank of America retreated 0.4% and 0.2%, respectively, while Regions Financial and Huntington Bancshares saw losses of 0.3% and 0.9%.
As earnings reports from major tech companies like Meta Platforms, Microsoft, and Tesla loomed, investors were left navigating a day marked by uncertainty and cautious optimism for future economic data.
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