Dow Drops 150 Points After Powell Signals Fed May Pause Rate Cuts – By Md Zamal Uddin
Date: October 29, 2025
Author: Md Zamal Uddin
U.S. stock markets saw a sharp reversal on Wednesday as Federal Reserve Chair Jerome Powell indicated that the central bank may not implement additional interest rate cuts before the end of 2025. The Dow Jones Industrial Average fell 189 points, or 0.4%, while the S&P 500 and Nasdaq Composite also retreated, declining 0.4% and 0.1% respectively. Earlier in the session, all three indexes had hit new intraday highs, with the Dow climbing as much as 334 points.
Fed Rate Cut and Market Reaction
During a two-day policy meeting, the Federal Reserve lowered its benchmark federal funds rate by 0.25 percentage points, placing it in a range of 3.75% to 4%. This marks the second rate cut in 2025 aimed at supporting a softening labor market.
However, Powell’s comments regarding the December meeting shifted market expectations. He stated that there were “strongly differing views about how to proceed in December,” adding that “a further reduction in the policy rate is not a foregone conclusion.”
The announcement triggered a rise in the 10-year Treasury yield, which climbed back above 4%, reflecting investor caution. Consumer-focused stocks, including Costco and McDonald’s, led the decline, alongside payment processors like Visa and Mastercard.
Technology Stocks and AI Market Trends
Despite the market pullback, some megacap technology stocks posted gains. Nvidia, an AI chip manufacturer, rose 3% and briefly surpassed a $5 trillion market capitalization, becoming the first U.S. company to reach this milestone. Other chipmakers such as Broadcom, AMD, and Micron also climbed during the session.
Analysts suggest that the AI sector is entering a new phase, driven less by quarterly earnings and more by anticipated long-term growth and partnerships. For example, Nvidia recently invested $1 billion in Finnish networking company Nokia, highlighting how corporate deals are shaping the broader technology landscape.
Upcoming earnings reports from other “Magnificent Seven” tech giants, including Alphabet, Meta Platforms, Microsoft, Apple, and Amazon, are expected to influence market sentiment further. Analysts warn that any negative surprises could have ripple effects across U.S. stock markets.
Global Trade and Economic Outlook
Investors are also closely monitoring geopolitical developments, particularly trade discussions between the U.S. and China. President Donald Trump’s meeting with Chinese President Xi Jinping in South Korea could impact tariffs, including those related to fentanyl imports, which currently stand at 20%. Market analysts note that optimism or pessimism from such high-level talks can significantly affect investor confidence.
Meanwhile, financial services companies like Visa are positioning themselves for future growth in emerging markets, including stablecoin adoption. Mizuho analysts have highlighted Visa’s potential as a dominant player in the stablecoin market, leveraging Visa Direct for widespread adoption.
Key Takeaways for Investors
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Dow Jones and other U.S. stock indexes fell sharply after Powell signaled that the Fed may pause rate cuts.
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The federal funds rate now stands at 3.75%–4%, marking the second cut in 2025.
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Consumer stocks and financial services companies experienced declines due to concerns over interest rates.
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Megacap tech and AI stocks like Nvidia continued to rise, driven by strategic partnerships and long-term growth prospects.
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Upcoming earnings from tech giants and geopolitical trade developments could significantly influence market volatility.
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Conclusion
The stock market’s reaction to the Federal Reserve rate cut 2025 underscores the delicate balance between monetary policy, investor expectations, and global economic conditions. As interest rate policy, AI market growth, and U.S.-China trade relations intersect, investors are navigating a complex landscape that requires both caution and strategic foresight.
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