The S&P 500 crossed the psychologically significant 7,000 level for the first time ever but trended lower into the Fed's decision to hold the target range for the federal funds rate at 3.50% to 3.75%. Stocks were up and down for much of Wednesday's trading session and closed mixed amid a recovery for a big health care stock and solid signals from multiple AI stocks.
Two voting members of the Federal Open Market Committee (FOMC) dissented from today's decision to hold interest rates steady: Stephen Miran, appointed last year by President Donald Trump to complete Adriana Kugler's term on the board, and Christopher Waller, one of a handful of names on the president's list of candidates to replace Jerome Powell as Fed chair.
Both Miran and Waller would cut right now, in line with Trump's wishes, though, according to Powell, interest rates are "within a range of plausible estimates of neutral."
Referring to the Fed's cuts in September, October and December, Powell said, "This normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2% once the effects of tariff increases have passed."
The Fed chair did not address a Justice Department investigation of the central bank in his prepared remarks. Answering the first question from the media, Powell said he attended Supreme Court oral arguments in the matter of whether Trump can fire Fed Governor Lisa Cook because it's the most important legal case in the central bank's 113-year history.
Catch up with developments around the first FOMC meeting of 2026 on our live Fed blog.
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How the Fed moved markets
"The Fed song remains the same," Morgan Stanley Wealth Management Chief Economic Strategist Ellen Zentner writes. "Lower interest rates may be coming, but investors will have to remain patient." Zentner notes that the Fed's pause preserves a path for cuts later in 2026.
"With signs of stabilization in the labor market and inflation holding steady," the economist observes, "the Fed is in position to play the 'wait-and-see' game."
The 2-year U.S. Treasury yield was up to 3.577% from 3.569% on Tuesday, while the 10-year yield rose to 4.245% from 4.223% and the 30-year yield climbed to 4.856% from 4.834%.
The U.S. Dollar Index, which measures the buck against a basket of currencies made up of the euro, the yen, the British pound, the Canadian dollar, the Swedish krona and the franc, firmed to 96.37 from 96.22.
At the closing bell, the S&P 500 was down less than a point at 6,978, the Dow Jones Industrial Average had added 12 points, or 0.02%, to 49,015, and the Nasdaq Composite was higher by 0.2% at 23,857.
UNH bounces back
UnitedHealth Group (UNH, +4.0%) recovered from its 19.6% crash on Tuesday and was the best-performing of the 30 Dow Jones stocks on Wednesday, even though it reported its first revenue miss in 30 years and must adjust to smaller-than-expected 2027 Medicare Advantage rate increases.
Nvidia (NVDA, +1.6%) was also higher after China approved purchases of its H200 artificial intelligence chip by customers including Alibaba Group Holding (BABA, +1.7%) and TikTok parent ByteDance.
With the January Fed meeting in the books, investors, traders and speculators will focus on the earnings calendar, with Meta Platforms (META, -0.6%), Microsoft (MSFT, +0.2%) and Tesla (TSLA, -0.1%) scheduled to report this evening.
NXT stock up
Nextpower (NXT, +13.3%), which changed its name from "Nextracker" in November, surged as much as 24.2% after the industrial stock reported expectations-beating fiscal third-quarter results and raised its full-year guidance.
Nextpower's platform integrates AI-supported software and smart trackers to optimize performance for utility-scale solar power plants. Management reported earnings of $1.10 per share (+6.8% year over year) on revenue of $909.4 million (+33.9% YoY) vs a Wall Street forecast for EPS of 93 cents on revenue of $815.3 million.
Nextpower now expects to report EPS of $4.26 to $4.36, up from $4.04 to $4.25, on revenue of $3.425 billion to $3.500 billion, up from $3.275 billion to $3.475 billion, for the full fiscal year. The board of directors also approved a $500 million stock buyback program.
"The demand environment remains robust in the U.S. and other global markets," founder and CEO Dan Shugar said in a statement announcing results, citing strong demand across business lines and a record backlog.
Chief Financial Officer Chuck Boynton, noting that Nextpower achieved an investment-grade credit rating, said both the raised guidance and the three-year stock repurchase plan reflect "confidence in our cash flow generation and balance sheet strength."
AI memory is made of STX
Seagate Technology (STX, 19.1%) added more than $15 billion to its market cap on Wednesday after the tech stock exceeded Wall Street estimates with its fiscal second-quarter earnings and revenue report.
Seagate posted EPS of $3.11 (+53.2% YoY) on revenue of $2.825 billion (+21.5% YoY), topping Wall Street estimates of $2.83 and $2.74 billion. Management expects to report third-quarter EPS of $3.40 on revenue of $2.90 billion.
CEO Dave Mosley said Seagate, whose hard disk drives are essential equipment in the AI boom, set new company records for gross margin and operating margin amid rising demand from hyperscalers building data centers.
"As AI applications amplify the creation and economic value of data," Mosley added, "modern data centers increasingly need storage solutions that combine performance and cost-efficiency at exabyte-scale."
