U.S. stocks opened in green on Wednesday morning as investors digested a better-than-expected GDP reading, mixed corporate earnings, and heightened geopolitical developments.
Market participants also remained focused on the Federal Reserve’s upcoming interest rate decision and key earnings from major tech firms later in the day.
The S&P 500 was up 0.14% while the Dow Jones Industrial Average traded slightly higher by 0.07%. The Nasdaq also gained 0.27% on Wednesday morning.
US economy grows faster than expected, Fed decision in focus
The Commerce Department reported on Wednesday that US gross domestic product (GDP) grew at an annualized rate of 3% in the second quarter, far exceeding economist expectations of 2.3% as surveyed by Dow Jones.
Despite the strong economic performance, investors remain fixated on interest rate policy as the Federal Reserve prepares to announce its latest decision Wednesday afternoon.
Markets are overwhelmingly pricing in a pause in rate hikes, with CME Group’s FedWatch tool showing a nearly 98% probability that the Fed will keep its benchmark rate unchanged at 4.25% to 4.5%.
While the central bank is widely expected to hold rates steady, traders are looking to Fed Chair Jerome Powell’s press conference for insight into the future trajectory of monetary policy.
Corporate earnings
Starbucks shares was up more than 1% after the company reported better-than-expected fiscal third-quarter results.
Revenue came in at $9.5 billion, beating the LSEG consensus estimate of $9.31 billion.
CEO Brian Niccol also signaled that the coffee chain’s turnaround plan is ahead of schedule, further boosting investor sentiment.
Meanwhile, Peloton shares rallied nearly 9% following an upgrade from UBS, which moved the stock to “buy” from “neutral” and noted significant upside potential.
The firm suggested that Peloton’s valuation could nearly double from current levels.
On the downside, Visa shares was up 0.18% even after posting earnings that topped analyst forecasts, reflecting potential investor caution in the face of macroeconomic uncertainty.
Shares of Danish drugmaker Novo Nordisk continued their downward slide, falling more than 4% after a 23% drop the previous session.
The company cut its full-year guidance due to weaker US sales growth projections for its Wegovy obesity treatment.
In response, Bank of America downgraded the stock to “neutral.” Novo Nordisk also announced a new CEO as part of efforts to navigate increasing competition and slowing growth.
Trade tensions rise as Trump imposes new tariffs on India
Geopolitical tensions added to the market’s cautious tone after US President Donald Trump announced a 25% tariff on Indian imports, effective August 1, 2025.
Trump cited India’s high tariffs, non-monetary trade barriers, and ongoing defense and energy dealings with Russia as justification for the move. A penalty will also be added alongside the base tariff.
“India will therefore be paying a tariff of 25%, plus a penalty,” Trump posted on Truth Social, emphasizing that the country remains a major buyer of Russian military and energy supplies amid the ongoing war in Ukraine.
The announcement comes as US-China trade talks face uncertainty, with no final decision on extending a pause in increased tariffs.
These developments have further clouded investor sentiment at a time when equities have shown signs of fatigue after a strong rally.
As markets await further clarity from the Fed and earnings from key players like Meta Platforms and Microsoft, volatility may persist in the near term.
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