July 30th, 2025
Markets Edge Higher Ahead of Fed Decision; Growth Rebounds but Momentum Slows
U.S. stocks traded slightly higher on Wednesday, with the Nasdaq leading gains over the S&P 500 and Dow Jones as investors looked ahead to the Federal Reserve’s interest rate decision expected later this afternoon. While markets broadly anticipate that the Fed will keep rates unchanged, attention will be focused on any forward guidance regarding the future path of monetary policy. Investors are also bracing for key earnings today after the close from Microsoft, Ford, and Meta Platforms.
Economic Takeaways:
- Bond yields moved higher across the curve, with both the 2-year and 10-year Treasury yields rising about 0.05%. The move followed new data showing modest GDP growth in the second quarter and a continued rally in the U.S. dollar, which extended its winning streak to five straight days.
- Preliminary GDP data showed the U.S. economy grew at a 3% annualized pace in Q2, rebounding from a 0.5% contraction in Q1. The swing was largely driven by a reversal in the import surge seen earlier in the year, as companies front-loaded shipments ahead of potential tariffs.
- The Federal Reserve is widely expected to keep its benchmark rate unchanged at 4.25%–4.50% when it announces its decision today. While a dissent or two is possible—with governors Christopher Waller and Michelle Bowman having voiced support for rate cuts—the majority of Fed officials are expected to stick to a data-dependent, wait-and-see stance. Looking ahead, the Fed is expected to deliver one to two rate cuts in the second half of 2025, followed by gradual easing in 2026 as it moves closer to a neutral policy rate of 3%–3.5%.
- The Cboe Volatility Index (VIX) popped 6% Tuesday from near its 2025 lows, possibly hinting at anxiety heading into earnings and data.
Divided Fed Poised to Hold Rates Steady, Resisting Trump’s Pressure to Cut
The Federal Reserve is expected to leave interest rates unchanged on Wednesday, as internal disagreements deepen and pressure mounts from President Trump and his administration to pivot toward monetary easing.
Following the release of stronger-than-expected economic data showing 3% GDP growth in the second quarter, Trump escalated his public campaign for lower rates.
“‘Too Late,’ MUST NOW LOWER THE RATE,” Trump wrote on Truth Social, doubling down on his criticism of Fed Chair Jerome Powell, whom he has repeatedly targeted throughout the year.
All eyes are now on whether Fed Governors Christopher Waller and Michelle Bowman will break ranks and dissent from the central bank’s decision—something that hasn’t occurred in over three decades. Both have previously voiced support for a rate cut ahead of Wednesday’s meeting.
JPMorgan Chief Economist Michael Feroli said he anticipates Waller will dissent, and added that while Bowman’s stance is less certain, “we suspect she joins him and dissents dovishly.”
Wilmer Stith, senior bond portfolio manager at Wilmington Trust, sees a single dissent as more likely than two, but emphasized it wouldn’t change the bottom line. “At the end of the day it doesn’t change the fact that the Fed funds rate will remain unchanged and that they will be patient. That’s the narrative.”
Attention will also turn to Fed Chair Powell’s afternoon press conference, where investors will be listening for any hint that the central bank is open to cutting rates in September. Markets currently expect the Fed’s next opportunity to lower rates will come at its September 16–17 meeting, which many traders are betting will mark the first rate cut of 2025.
On the Move
- Starbucks (SBUX) jumped 4% in pre-market trading after reporting better-than-expected quarterly revenue. However, challenges remain for the coffee giant, as same-store sales declined for a sixth straight quarter, reflecting ongoing pressure in key markets.
- Humana (HUM) surged 8% ahead of the open after delivering strong second-quarter earnings that topped expectations. The health insurer also raised its 2025 outlook for both revenue and earnings, signaling confidence despite sector-wide cost concerns.
- Palo Alto Networks (PANW) fell 5% following a CNBC report that the company plans to acquire CyberArk (CYBR) in a $25 billion deal, a potential consolidation move in the cybersecurity space.
- Visa (V) slipped nearly 2% in early action, despite beating analyst estimates on both revenue and earnings. The company noted that consumer spending “remains resilient” and maintained its full-year guidance, though investors appeared underwhelmed.
- Super Micro Computer (SMCI) rose another 2% in early trade, continuing its rally ahead of its highly anticipated earnings report next Tuesday.
- Mondelez International (MDLZ) dipped 1% after topping Wall Street’s earnings expectations for the quarter. Despite the beat, the Oreo maker reaffirmed its outlook for a 10% decline in full-year adjusted earnings.
- Adidas shares fell 7% in overseas trading after the company cited higher costs from U.S. tariffs, warning it may need to raise prices. Nike (NKE) slipped 0.7% in sympathy.
- Novo Nordisk (NVO) declined another 4% in early trading, extending its losses after cutting revenue guidance. The stock is now down over 20% this week. Eli Lilly (LLY), which fell 5% Tuesday amid obesity drug demand concerns, bounced modestly in early action today.
- Whirlpool (WHR) remained under pressure in pre-market trading, after plunging 13% Tuesday on disappointing quarterly results.
- United Parcel Service (UPS) edged higher ahead of the bell, recovering slightly after a 10% sell-off Tuesday sparked by weaker-than-expected earnings.
- UnitedHealth Group (UNH) ticked up nearly 1% in early trading, attempting to rebound after a 7% slide Tuesday on missed earnings and guidance, as the company grapples with elevated care costs.
What’s Ahead
Microsoft (MSFT) and Meta Platforms (META) are set to report earnings later today, offering fresh insight into chip spending, digital advertising trends, cloud growth, and AI investments.
Their results will be closely watched following Monday’s milestone, when the “Magnificent Seven” tech giants collectively hit a new high for the first time since December.
Investors also brace for more economic data tomorrow with the Personal Consumption Expenditures (PCE) price index for June, which is expected to reinforce ideas that prices are rising, possibly due to tariffs.
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