S&P 500 Dips as Fed Holds Rates Steady, Nasdaq Gains Ahead of Earnings

Feb 2, 2026, 2:20 AM

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US stocks showed little movement on Wednesday, with the S&P 500 index slipping fractionally from a record high after the Federal Reserve decided to keep interest rates unchanged in its first policy decision of the year. This decision came amid anticipation of earnings from significant technology firms, placing Wall Street in a cautious yet optimistic position.

The S&P 500 briefly surpassed the 7,000 mark earlier in the day but ultimately closed lower. Contrastingly, the tech-heavy Nasdaq Composite managed a slight uptick of 0.2%, while the Dow Jones Industrial Average remained relatively unchanged. The Federal Reserve's decision to maintain rates within a range of 3.5% to 3.75% resulted from a 10-2 vote, with dissenting opinions from Governors Chris Waller and Stephen Miran advocating for a 25 basis point cut.

Investors are keenly awaiting insights from Fed Chair Jerome Powell during his press conference, as markets are already pricing in potential rate reductions later this year. Speculation suggests that two quarter-point cuts may be on the horizon by the end of 2026, reflecting a cautious optimism amongst traders.

The backdrop of this financial landscape includes a recent decline in the dollar, which has raised concerns about a potential economic downturn. Following President Trump's dismissal of the dollar's drop, the currency saw a modest rebound, although it had previously reached its lowest level since 2022. Compounding these issues is a political cloud over the Fed, with investigations into Powell's Senate testimony regarding renovations of the central bank's headquarters, adding uncertainty to future monetary policy.

In the tech sector, excitement is building ahead of earnings reports from major players, including Microsoft and Meta Platforms. Both companies have made significant investments in AI-focused data centers, which are underpinned by advanced chip technology from ASML, a company that recently reported a surprise surge in orders for its machinery. This news has fueled optimism for a sustained boom in artificial intelligence, although ASML's shares dipped amidst this backdrop.

The earnings reports from Microsoft, Meta, and fellow tech giant Tesla are set to be released after markets close on Wednesday, setting the stage for Apple's quarterly update on Thursday. As analysts scrutinize these earnings, they remain hopeful that these companies will reflect positive growth and innovation in their financial results, despite the broader economic uncertainties.

Overall, as the financial markets navigate through a mix of steady interest rates and significant tech earnings on the horizon, investors will need to remain vigilant and adaptable to the evolving economic landscape.

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