Stock Market Today: Dow, S&P 500, Nasdaq Rise as Fed Holds Rates Steady; Powell Emphasizes ‘Wait and See’ Approach
By Amalya Dubrovsky, Karen Friar, and Josh Schafer
Updated: Thursday, May 8, 2025, 7:38 AM
U.S. stock markets closed higher on Wednesday as investors digested the Federal Reserve’s decision to keep interest rates steady and assessed the prospects of upcoming U.S.-China trade talks. The benchmark S&P 500 edged up 0.4%, the Nasdaq Composite gained approximately 0.3%, and the Dow Jones Industrial Average (DJIA) rose 0.7%, adding nearly 300 points to its value.
Fed Holds Interest Rates Steady
In its May meeting, the Federal Reserve opted to maintain the federal funds rate at a range of 4.25% to 4.5% for the third consecutive session. The central bank’s statement highlighted the rising risks of both higher unemployment and inflation, signaling caution amid uncertain economic conditions.
Federal Reserve Chair Jerome Powell reiterated a cautious “wait and see” stance regarding future rate cuts. “My gut tells me that uncertainty about the path of the economy is extremely elevated and that the downside risks have increased,” Powell remarked. He elaborated that while there are scenarios where cutting rates this year could be appropriate, there are also situations in which it would not be. “We just don’t know,” he added, emphasizing the Fed’s need to evaluate the ongoing economic data carefully before making any adjustments.
Market Movers: Disney and Alphabet
Despite the overall positive close, notable stock movements influenced individual indices. Alphabet (GOOGL, GOOG) shares fell sharply by 7%, placing downward pressure on the Nasdaq. On the other hand, Disney (DIS) stock surged 10%, boosting the Dow Jones Industrial Average.
Trade Talks Between the U.S. and China in Focus
Investors have been closely monitoring developments in U.S.-China relations ahead of planned trade discussions slated for this weekend—the first major talks since tariffs on Chinese goods were raised to 145% last April under the Trump administration.
The ongoing hope that these diplomatic efforts could eventually lead to a trade resolution has supported stock prices in recent weeks. However, expectations remain tempered, with indications suggesting the Geneva meeting may not deliver a sweeping trade agreement.
When asked at a press conference whether he would consider lowering tariffs on China to facilitate negotiations, former President Donald Trump responded firmly, “no,” signaling a continued tough stance on trade policy.
Sector Highlights and Additional News
The technology sector also received a boost following a Bloomberg report that former President Trump is looking to repeal certain Biden-era restrictions on AI chip exports. Nvidia (NVDA) shares rose 3% in anticipation that U.S. companies might regain greater flexibility in exporting key AI components, as well as expanding data center capacity abroad—restrictions which were introduced last January.
Market Outlook
With the Fed showing patience and trade negotiations hanging in the balance, markets appear to be cautiously optimistic. The S&P 500 concluded the day near its highest levels of the session, reflecting a tentative confidence among investors while remaining vigilant of economic uncertainties.
As the situation develops, market participants will closely watch upcoming economic data releases, Fed communications, and the outcomes of U.S.-China trade dialogues for further direction.
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