Tech Stocks Sink as Fed Keeps Rates Unchanged

NASDAQ Composite (IXIC) led the decline on Wednesday as technology stocks retreated after the Federal Reserve's decision to maintain interest rates within the 4.25%-4.5% range. The tech-heavy index lost approximately 0.5%, erasing some of Tuesday's gains. The broader S&P 500 (GSPC) also declined by nearly 0.5%, while the Dow Jones Industrial Average (DJI) shed 0.3%.

Fed's Statement Removes Inflation Progress Language

In Wednesday's statement, the Federal Reserve notably dropped language from its December statement indicating progress towards its inflation goal of 2%. It now simply states that "Inflation remains somewhat elevated." Fed Chair Jerome Powell downplayed this change, describing it as "language cleanup" rather than a signal.

Tesla, Meta, and Microsoft Earnings Impact

* Tesla (TSLA) reported weak fourth-quarter earnings, missing Wall Street estimates on per-share earnings and falling short on several other key metrics. However, shares rebounded after-hours.
* Meta (META) shares fell after disclosing lower-than-expected first-quarter sales guidance and plans to increase capital expenditures.
* Microsoft (MSFT) reported strong quarterly results, but its cloud revenue missed estimates. Shares initially dropped in after-hours trading, but later recovered.

Powell Addresses Cryptocurrency and AI

Powell emphasized that the Fed's role in regulating cryptocurrencies is primarily through banks. He stressed that banks can engage in crypto activities as long as they manage the risks effectively. Powell also discussed artificial intelligence, noting that the Fed is monitoring developments and has been encouraged by the potential benefits.

Fed's Economic Outlook

Powell indicated that the labor market appears to be stabilizing, while moderating shelter inflation suggests progress towards the Fed's inflation goal. However, he acknowledged "elevated uncertainty" in economic forecasts due to uncertainties surrounding the Trump administration's policies.

Nvidia (NVDA) Faces Pressure

Nvidia shares continued to slide on Wednesday amid reports that the Trump administration is considering additional curbs on the company's chip exports to China. The news comes as investors grapple with the impact of a new artificial intelligence model developed by a Chinese firm, which has raised concerns about the competitiveness of American AI companies.