US close: Stocks fall as Fed holds fire, tech earnings in focus

(Sharecast News) - US stocks closed in the red on Wednesday after the Federal Reserve said it would bide its time before making any further interest-rate cuts, while investors turned cautious ahead of a number of heavyweight corporate earnings due after the closing bell.

Meta Platforms, Microsoft and Tesla were all due to report quarterly figures after markets closed, with the focus likely to have shifted in recent days to how much the tech giants are spending on their AI software.

There was a huge sell-off of AI-related stocks on Monday after the news that Chinese outfit DeepSeek has managed to develop an LLM assistant of similar capabilities to the US majors' at the fraction of the cost. Meta edged higher on Wednesday, while Microsoft and Tesla both fell.

"The week so far has been dominated by the tech sector thanks to the new AIs coming on stream from China. Investors will be hoping that tonight's trio of titans will repeat Netflix's trick from last week and provide good news in spades. ASML set the stage today with better figures, but sentiment remains brittle following Monday's volatility," said Chris Beauchamp, chief market analyst at IG.

The Dow fell 0.3% by the end of play, while the S&P 500 and Nasdaq both dropped 0.5%.

As expected, the Federal Open Market Committee kept interest rates on hold at the conclusion of its two-day meeting in Washington. Policymakers left the target range for official short-term interest rates at 4.25-4.50%.

During his press conference, Fed chief Jerome Powell said the central bank would focus on achieving further progress on bringing inflation back to target. He also said that monetary policy was currently "fairly restrictive" and that it was not necessary for inflation to have moved all the way back to 2% before the Fed moved.

Paul Ashworth at Capital Economics labelled the Fed's policy statement as "hawkish" at the margin. "The FOMC is happy to remain on the sidelines [...] If the Fed doesn't resume cutting in the next few months, however, we suspect the window will have closed. While markets are still pricing in second half rate cuts, our view is that a flurry of tariffs [proposed by Donald Trump] will put a stop to that, as inflation rebounds to 3%."

Also on the macro front, US mortgage applications fell 2% in the seven days ended 24 January, according to the Mortgage Bankers Association of America. Applications to refinance a mortgage fell 7%, while applications to purchase a new home slipped 0.4%.

The US goods trade balance hit a record $122.11bn in December, according to the Census Bureau, missing market expectations of $105.4bn and up sharply from November's $103.5bn print. Imports surged 3.9% to $289.6bn, potentially due to US firms rushing to secure goods ahead of rumoured tariffs, while exports dropped 4.5% to $167.5bn.

Finally, wholesale inventories fell by 0.5% in December, according to the Census Bureau, missing market expectations for a 0.2% increase. Stocks of durable goods shrank by 0.5%, while nondurable goods inventories fell by 0.3%,

In equity news, Frontier Airlines finished higher despite the news that debt-laden Spirit Airlines rebuffed its second takeover approach in under three years. Spirit instead it remained committed to emerging from bankruptcy proceedings following a hearing scheduled for 13 February.

T-Mobile shares jumped after the telecom lifted its expectations for subscriber growth in 2025, projecting between 5.5 million and six million postpaid net additions, more than double Wall Street estimates, as it also beat expectations for fourth quarter revenue.

Dow Jones - Risers

Nike Inc. (NKE) $76.61 2.98%

Apple Inc. (AAPL) $239.36 2.53%

Microsoft Corp. (MSFT) $442.33 2.08%

International Business Machines Corporation (CDI) (IBM) $228.63 1.32%

Walgreens Boots Alliance, Inc. (WBA) $11.25 1.01%

Walt Disney Co. (DIS) $113.18 0.93%

Caterpillar Inc. (CAT) $393.49 0.82%

Merck & Co. Inc. (MRK) $98.21 0.77%

Coca-Cola Co. (KO) $62.84 0.77%

Johnson & Johnson (JNJ) $151.20 0.55%

Dow Jones - Fallers

Boeing Co. (BA) $173.67 -2.31%

Intel Corp. (INTC) $19.76 -1.67%

Salesforce.Com Inc. (CRM) $354.02 -1.65%

Home Depot Inc. (HD) $413.42 -1.29%

Dow Chemical Co. (DOW) $41.03 -0.95%

Unitedhealth Group Inc. (UNH) $537.90 -0.84%

American Express Co. (AXP) $315.02 -0.64%

McDonald's Corp. (MCD) $290.17 -0.34%

Chevron Corp. (CVX) $155.73 -0.31%

Verizon Communications Inc. (VZ) $40.29 -0.27%

S&P 500 - Risers

Brighthouse Financial, Inc. (BHF) $62.00 21.76%

F5 Inc. (FFIV) $300.46 13.21%

Starbucks Corp. (SBUX) $108.58 9.29%

Henry Schein Inc. (HSIC) $79.79 4.85%

Ipg Photonics Corp. (IPGP) $72.04 4.19%

Nvidia Corp. (NVDA) $123.79 3.69%

Lincoln National Corp. (LNC) $35.34 3.67%

Fluor Corp. (FLR) $48.02 3.18%

Fortinet Inc. (FTNT) $99.31 3.17%

Synchrony Financial (SYF) $68.77 3.17%

S&P 500 - Fallers

Packaging Corp. Amer (PKG) $215.20 -9.74%

Danaher Corp. (DHR) $223.73 -9.73%

Boston Properties Inc. (BXP) $68.97 -5.76%

Msci Inc. (MSCI) $594.46 -5.39%

Everest Group (EG) $351.51 -4.34%

Gen Dynamics Corp. (GD) $251.45 -4.24%

VF Corp. (VFC) $25.51 -4.06%

Illumina Inc. (ILMN) $131.72 -3.72%

Juniper Networks Inc. (JNPR) $34.99 -3.60%

Sba Communications Corp. (SBAC) $198.10 -3.53%

Nasdaq 100 - Risers

Starbucks Corp. (SBUX) $108.58 9.29%

T-Mobile Us, Inc. (TMUS) $235.15 6.45%

Asml Holdings N.V. (ASML) $712.65 5.75%

Henry Schein Inc. (HSIC) $79.79 4.85%

Nvidia Corp. (NVDA) $123.79 3.69%

Mercadolibre Inc. (MELI) $1,889.76 3.22%

Ross Stores Inc. (ROST) $150.15 2.93%

Check Point Software Technologies Ltd. (CHKP) $203.90 2.93%

Trip.com Group Limited (TCOM) $71.29 2.86%

Apple Inc. (AAPL) $239.36 2.53%

Nasdaq 100 - Fallers

Illumina Inc. (ILMN) $131.72 -3.72%

Seagate Technology Plc (STX) $99.38 -3.43%

Align Technology Inc. (ALGN) $224.45 -2.62%

Intuit Inc. (INTU) $592.99 -2.56%

Texas Instruments Inc (TXN) $180.27 -2.32%

Biogen Inc (BIIB) $144.41 -2.20%

Cintas Corp. (CTAS) $198.53 -2.11%

Mondelez International Inc. (MDLZ) $57.13 -1.93%

Charter Communications Inc. (CHTR) $359.33 -1.90%

Comcast Corp. (CMCSA) $37.36 -1.84%