Nvidia tops $4 trillion. Bitcoin hits a high above $112,000. And the technology-heavy Nasdaq climbs to a record close. That all sounds great, but it leaves a lot for Federal Reserve Chair Jerome Powell to ponder.
Powell has one of the easiest jobs in Washington, according to President Donald Trump. But the latest stocks rally Wednesday
highlights a key dilemma—are the market and the economy going to stay strong, or will Trump’s tariffs derail them?
The answer will go a long way to determining if and when interest rates go lower—something Trump has made very clear he would like to see. Minutes from last month’s meeting, released Wednesday, show a divide emerging among policy makers, with some ready to start cutting sooner rather than later.
For his part, Powell says there is still a risk that tariffs drive up inflation, which is the main reason for the wait-and-see approach even as the labor market shows signs of weakening. But there is also a chance that tariffs slam the brakes on growth—the new 50% levy on copper, which is crucial for everything from electronics to homebuilding, looks particularly risky in that regard.
If that is what’s happening, then waiting for more evidence could put the Fed behind the curve—and it would add weight to Trump’s accusations that Powell is always too late to act. The upcoming earnings season could provide more clues.
It’s not just the Fed and Powell facing tough choices—it’s investors, too. The stock market is powering ahead as if tariffs aren’t a threat to the economy. The bond market is holding up as if tariffs won’t be inflationary and Fed cuts are coming.
It’s hard to see how they can both be right. And the worst-case scenario is stagflation, when growth tanks and inflation takes off. Everyone loses if that comes to pass. It would make Nvidia and the market’s recent
milestones look like hollow victories, and Powell’s job harder still.
—Brian Swint
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Federal Reserve Split Over When to Cut Rates: Minutes
Minutes from the Federal Reserve’s June 17-18 meeting revealed that policymakers increasingly disagree over when, why, and by how much to cut interest rates this year, as they consider conflicting signals from inflation, the labor market, and fiscal policy.
- The June dot plot, a chart showing individual member’s forecasts for rates, showed 10 members of the Federal Open Market Committee projected two cuts in 2025, while nine predicted fewer. Some members argued for no cuts this year, citing the risk that inflation could rise, including because of tariffs.
- Most members consider that some reduction in the Fed’s benchmark target range—currently at 4.25% to 4.5%--would likely be appropriate, but a couple said that if the data evolve as they expect, they could consider cutting rates “as soon as the next meeting,” which is later this month.
- Those officials were likely Vice Chair for Supervision Michelle Bowman and Gov. Christopher Waller, both of whom have publicly endorsed the possibility of a cut at the July 29-30 meeting. Markets see that as unlikely after the strong June jobs report.
- President Donald
Trump repeated his demand for rate cuts in a social media post on Wednesday, saying the current Fed rate is “AT LEAST 3 Points too high.” He blames Chair Jerome Powell for costing the U.S. $360 billion annually in refinancing costs. “Lower the Rate!!!” Trump posted.
What’s Next: Officials were particularly concerned about potential stagflation, where inflation stays persistent while the labor market weakens. Some Fed members said lower-income households are shifting to cheaper goods, a sign of increasing financial strain that could be amplified by tariff-related price hikes.
—Nicole Goodkind and Janet H. Cho
Brazil Promises Response to 50% U.S. Tariff
Brazil vowed to respond after President Donald Trump singled out the country for the highest tariff rates of his Liberation Day reset thus far—attacking the South American nation for the treatment of its former leader, a Trump ally who is currently facing trial for allegedly trying to stage a coup against the sitting president.
- Trump said Brazil’s products will have a 50% tariff entering the U.S. starting Aug. 1. He also said the U.S. would start an investigation into Brazil’s trade practices under Section 301 of U.S. trade law. Current Section 301 investigations include China’s practices in the semiconductor and shipbuilding sectors.
- The tariff level is significantly higher than the 25% to 40% rate Trump has chosen for imports from 21 other countries as he restarts his so-called “reciprocal” tariffs. Trump is unilaterally setting tariffs on goods from around the world after moving his deadline for trade deals to August.
- Brazil’s President Luiz Inácio Lula da Silva fired back, in a social media post, saying he won’t take the levy lying down and citing the nation’s own laws on economic reciprocity. Trump’s letter to Brazil was a major departure from the form-like letters sent to other nations so far. He called the country’s treatment of former President Jair Bolsonaro “an international disgrace.” He also lashed out at Brazil’s censorship of American social-media platforms.
- Earlier on Wednesday, Trump announced he was setting tariff rates on imports from seven other countries, including 20% for products from the Philippines, 25% for imports from Brunei and Moldova, and 30% for products from Algeria, Iraq, Sri Lanka, and Libya.
What’s Next: New trade deals could also be announced shortly, with Trump’s new August deadline approaching in just three weeks. People are closely watching the European Union, which trades even more with the U.S. than China. On Tuesday, Trump said a letter to the EU might come out today.
—Brian Swint, Anita Hamilton, and Liz Moyer
Chip Maker Hits Historic $4 Trillion Valuation Amid Tech Rally
Nvidia’s record rally just hit another milestone. The chip maker became the first
company ever to hit a $4 trillion valuation in intraday trading on Wednesday, according to Dow Jones Market Data.
- The company, which is led by
CEO Jensen Huang, reached a market capitalization of $4.012 trillion shortly after the market opened. Shares pulled back slightly after the milestone, closing at $162.88, up 1.8% to $3.97 trillion.
- Nvidia did manage a closing market cap record, overtaking Apple. The iPhone maker’s valua
