NEW YORK (AP) — U.S. stock indexes are drifting on Wednesday, ahead of the Federal Reserve’s upcoming decision on interest rates and after two days of disruption driven by doubts about the artificial-intelligence boom.
The S&P 500 was down 0.3% in afternoon trading on a packed day, which will also include earnings reports from influential companies like Microsoft, Meta Platforms and Tesla after trading closes. The Dow Jones Industrial Average was up 27 points, or 0.1%, as of 12:20 p.m. Eastern time, and the Nasdaq composite was 0.6% lower.
Nvidia has been at the center of Wall Street’s action this week after a Chinese upstart, DeepSeek, said it developed a large-language model that can compete with the world’s best without having to use Nvidia’s top chips. That cast doubt about whether AI development will require as much spending on chips, vast data centers and electricity as earlier thought, which caused huge swings for stocks across the industry.
Nvidia fell 4.8% Wednesday after plunging nearly 17% Monday and then jumping nearly 9% Tuesday. It was the heaviest weight dragging the S&P 500 lower, even as the majority of stocks within the index rose.
The Big Tech companies reporting their latest results after trading ends will likely get questions from analysts about whether DeepSeek’s discovery will mean lower investment from them in building out AI. Such answers could help guide the next jagged move for the industry, which was instrumental in the S&P 500’s rallying to back-to-back yearly gains of more than 20% for the first time since before the millennium.
Microsoft and Tesla all fell ahead of their reports, weighing on the market.
But before hearing from them, Wall Street needs to get past another potential market mover. The Federal Reserve will announce in the afternoon what it will do with the federal funds rate, which controls how much banks charge for overnight loans.
Such moves filter through the economy to all kinds of other loans, and traders widely expect the Fed to hold the federal funds rate steady. If they’re correct, it would be the first time the Fed has done so since it began lowering rates in September to give the economy a boost.
After the Fed announces its decision, Chair Jerome Powell will also speak with reporters, where he could give hints about whether the central bank is envisioning more cuts to rates this year. In December, the Fed helped send U.S. stocks to one of their worst days of 2024 after indicating it envisions cutting the fed funds rate just twice in 2025, down from an earlier projection of four times.
