Dow plunges 1,153 points after Fed holds rates steady in fractious meeting

The Dow Jones Industrial Average plunged 1,153 points, and the 30-year Treasury yield climbed to its highest level since 2007 as investors absorbed the central bank’s most fractured decision in years. Three of the nine voting members of the Federal Open Market Committee dissented in favor of a quarter-point rate increase, according to CNN. Chair Kevin Warsh described the internal debate as “a good family fight” during his press conference, adding, “Most of our discussions were on the big questions that matter to the conduct of monetary policy.”

The benchmark federal funds rate remains at 3.5% to 3.75%, a level the Fed has maintained despite inflation running above its 2% target for five straight years, Brew Markets reported. A milder-than-expected inflation reading for June had raised hopes of a dovish signal, but the committee’s statement left growth and inflation language essentially unchanged, according to Janus Henderson portfolio manager Daniel Siluk. The Nasdaq Composite marked an 11% drop from its June record high, Reuters noted on X.

“I wouldn’t characterize what we did as anything like a pause,” Warsh said at the press conference. “I would characterize what we did as a rigorous review of the economic situation.” Wednesday’s meeting was the second under Warsh, who was appointed by President Trump, and it cemented a shift toward shorter statements and less forward guidance. Traders now price a 53% chance of a quarter-point hike at the September meeting, Brew Markets reported.

The 30-year Treasury yield’s jump to a level not seen since 2007 reflected mounting concern that the Fed is not acting quickly enough to bring down stubborn inflation, CNN said. At the opening bell, the Dow had fallen just 73.1 points, or 0.14%, to 52,674.21, according to Reuters data. The S&P 500 opened 0.14% lower at 7,418.16, and the Nasdaq dropped 0.05% to 24,863.48.