US sharemarkets fell sharply overnight as investors reacted to the Federal Reserve’s decision to leave interest rates unchanged, while rising bond yields and mixed technology earnings pressured sentiment.
The Dow Jones Industrial Average tumbled 1,153.18 points, or 2.19%, marking its biggest one-day decline since April 2025. The S&P 500 fell 1.52%, while the Nasdaq Composite lost 1.74%, finishing more than 10% below its intraday record high.
Markets initially traded higher before reversing course after the Fed kept rates on hold and reiterated its commitment to returning inflation to its 2% target. The central bank’s cautious stance pushed the 30-year US Treasury yield above 5.2%, its highest level since 2007, as investors reduced expectations for near-term policy easing.
Technology earnings were mixed. Microsoft rose 9% in after-hours trading after reporting stronger-than-expected enterprise demand, while Meta Platforms fell 8% as investors questioned whether its heavy artificial intelligence spending is delivering sufficient returns. The contrasting results reinforced growing scrutiny of AI investment across the sector.
Attention now turns to another busy day of earnings, with Apple, Amazon and Coinbase due to report after the closing bell. Investors will also watch the June personal consumption expenditures (PCE) inflation report and weekly jobless claims for further clues on the Federal Reserve’s next move.
Australian Market Outlook
Australian shares are expected to open lower after rising US bond yields and a late sell-off on Wall Street weighed on global sentiment. S&P/ASX 200 futures are down 51 points, or 0.6%, to 8,945. US 10-year Treasury yields rose to 4.68%, while the 30-year yield reached its highest level in 19 years after Fed Chair Kevin Warsh reiterated the central bank’s commitment to restoring price stability. Markets will now look to the US PCE inflation report for fresh direction, while locally investors continue to assess the outlook for Australian interest rates following this week’s stronger-than-expected inflation data.
