US Markets Push to Record Highs as AI Optimism Builds Ahead of Fed Decision
Wall Street continued its upward momentum on Wednesday, with the S&P 500 breaking above the 7,000 level for the first time on record. The move was driven by renewed enthusiasm around artificial intelligence and growing anticipation ahead of the Federal Reserve’s latest policy announcement, alongside earnings from several megacap technology firms.
While US equities surged, the picture was very different across Europe. The FTSE 100 and major European indices slipped into negative territory as investors remained cautious ahead of key central bank developments and currency moves.
Fed Decision in Focus
Traders appeared largely unfazed by the recent weakness in the US dollar, with markets widely expecting the Federal Reserve to leave interest rates unchanged this evening, maintaining the current range of 3.75% to 3.5%. Expectations for the next rate cut have been pushed further out, with many believing it may not arrive until after Jerome Powell’s term as Fed Chair ends in May.
Powell himself remains under intense scrutiny, facing a criminal investigation related to renovations at the Federal Reserve’s buildings and ongoing criticism from former President Donald Trump, who has accused the Fed of moving too slowly on rate cuts.
Despite these distractions, the Fed has already lowered borrowing costs at each of its last three meetings, largely in response to signs of a cooling US labour market.
The policy decision is due at 7pm UK time, but market attention will quickly shift to Powell’s press conference. Alongside economic policy, several non-economic topics are expected to surface, including the Department of Justice subpoena, the Lisa Cook case at the Supreme Court, speculation over the next Fed Chair, and whether Powell will remain on the Board of Governors after his term ends.
Economists at Deutsche Bank expect Powell to stick closely to his previous public statements, avoiding commentary on succession plans. From a policy standpoint, they anticipate a more optimistic assessment of the US economy, with the Fed signalling it is well positioned to respond to risks on either side of its dual mandate of inflation and employment.
Big Tech Earnings Take Centre Stage
Adding to market excitement, investors are also bracing for earnings reports from several members of the so-called “Magnificent Seven.”
Emma Wall, Chief Investment Strategist at Hargreaves Lansdown, highlighted the importance of the day:
“It’s a big day for Big Tech as the market awaits earnings from Meta, Microsoft and Tesla later today, with Apple reporting tomorrow. These companies don’t just move their own share prices — they can influence the direction of the entire market.”
She also noted that Elon Musk’s earnings calls often draw particular attention, as they tend to offer deeper insight into long-term strategy and forward-looking guidance.
These results will set the tone for Apple’s quarterly update on Thursday, which many see as a key bellwether for broader tech sentiment.
Currency Moves and Global Markets
In currency markets, the euro surged to $1.20 against the US dollar, marking a significant milestone as the greenback continued to weaken.
European equities struggled:
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The FTSE 100 fell 0.4%
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Germany’s DAX slipped 0.5%
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France’s CAC 40 dropped 1%
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The STOXX 600 declined 0.6%
Meanwhile, US markets opened firmly higher:
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The S&P 500 rose 0.3%, pushing above 7,000
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The Nasdaq Composite gained around 0.6%
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The Dow Jones Industrial Average hovered near flat
Sterling also softened, with the pound trading 0.4% lower against the US dollar at 1.3788.
Market Takeaway
With US indices at record highs, AI-driven optimism running strong, and major tech earnings underway, traders are navigating a market where sentiment remains bullish — but highly sensitive to central bank messaging and corporate guidance. The Fed’s tone tonight, rather than the rate decision itself, may prove the real catalyst for the next major move.
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