U.S. Stocks Slide After Fed Pause, Escalation in Iran War

By Rob Curran

U.S. stocks fell sharply after the Federal Reserve held rates steady, while investors worried that rate hikes were coming later this year as the war in Iran escalated.

The Fed left interest rates in a range between 3.5% and 3.75% but there were three dissenting votes from officials calling for a hike. Stocks initially bounced and the U.S. dollar weakened after the decision because of speculation that the central bank could raise rates in July. In the press conference following the statement, Fed Chairman Kevin Warsh emphasized his board's commitment to bringing inflation back to the 2% target.

The Dow Jones Industrial Average dropped 1153.18 points, or 2.19%, to 51594.14. The broad S&P 500 lost 112.63 points, or 1.52%, to 7316.15. The tech-heavy Nasdaq Composite fell 433.97 points, or 1.74%, to 24442.94 , and is now down by almost 10% from its June closing record, on the cusp of correction territory

"Under Chair Powell, the Fed really, really missed the boat on inflation and waited far too long and was heavily criticized for it," said Oliver Pursche, senior vice president at financial advisory firm Wealthspire. "I don't think Kevin Warsh wants that to be part of his legacy and certainly doesn't want that to be an early fumble."

Write to Rob Curran at rob.curran@dowjones.com

(END) Dow Jones Newswires

July 29, 2026 16:12 ET (20:12 GMT)