Fed signals possible rate cut; Wall Street soars

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Rate cut on horizon
The Federal Reserve expectedly kept its benchmark rate steady at 5.25% to 5.50% on Wednesday, but Chairman Jerome Powell signaled the U.S. central bank could cut the rate in its September meeting. The Fed’s overnight borrowing rate, currently at its highest in 23 years, has held steady over the past year but is widely expected to come down this year as inflation begins to ease.

U.S. stocks rally
U.S. stocks jumped after Powell said a rate cut in September was “on the table.” The S&P 500 closed 1.58% higher, the Nasdaq Composite gained 2.64%, and the Dow Jones Industrial Average added 0.24%. Nvidia soared 12.8%, its best one-day performance since Feb. 22, after better-than-expected results from rival Advanced Micro Devices brought chip bulls back. Boeing added 2% even as it reported a bigger loss and weaker revenue than what analysts had expected and named a new CEO. Treasury yields fell after the Fed announcement while gold rose.

Meta shines
Meta beat expectations as second-quarter revenue grew 22% to $39.07 billion while net income jumped 73% to $13.47 billion, boosted by higher advertising on Facebook and Instagram. The results come a week after Alphabet reported an 11% increase in Google ad sales. Meta expects “significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts.” The stock rose 7% in after hours trading.

Oil gains
U.S. crude oil futures rose 4% on Wednesday after Hamas political leader Ismail Haniyeh was assassinated in Tehran. Iran accused Israel of the killing, which comes a day after Israel said it had eliminated a senior Hezbollah leader in Beirut. Oil also got a boost from declining U.S. oil and gas stockpiles, a positive sign for demand. The West Texas Intermediate September contract last traded at was last trading at $78.63 per barrel.

Japan currency intervention
Japanese authorities spent 5.53 trillion yen, or $36.8 billion, to support the yen in July, official data showed. The size of the intervention was nearly in line with estimates and came after several warnings from authorities against heightened volatility in forex markets. The yen fell to a 38-year low against the U.S. dollar in early July.

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Reuters reported on Wednesday that the U.S. plans to unveil a new rule that will make it harder for non-U.S. companies to export semiconductor manufacturing equipment to China, but that allies including Japan, the Netherlands and South Korea will be excluded.

Exports to China from countries including Israel, Taiwan, Singapore and Malaysia will, however, be impacted by the U.S. rule, according to the report.

Shares of Dutch semiconductor equipment maker ASML jumped as much as 10% on Wednesday. 

There’s also uncertainty surrounding Arm, whose shares fell more than 13% in extended trading on Wednesday after the chip-architecture firm’s tepid earnings forecast for the current quarter and the full fiscal year.

Crowdstrike‘s problems are not over, with Delta Air Lines the latest to say it would seek compensation for the disruptions caused by the software company’s botched upgrade in July.

Delta CEO Ed Bastian told CNBC’s “Squawk Box” the massive IT outage cost the carrier around $500 million. The figure includes not just lost revenue from cancelled flights but “the tens of millions of dollars per day in compensation and hotels” over a period of five days, he said.

— CNBC’s Jordan Novet, Arjun Kharpal, Leslie Joseph and Ece Yildirim contributed to this report.