Nasdaq, S&P Open Slightly Higher as Traders Digest Strong GDP Report, Await Fed Decision

Nasdaq opened higher Wednesday as investors analyzed fresh earnings and awaited the Federal Reserve’s interest rate decision.

A stronger-than-expected reading of U.S. gross domestic product did little to shift investor attention away from interest rates and rolling corporate earnings. The U.S. economy grew at a 3% clip in the second quarter, the Commerce Department said Wednesday, while economists polled by Dow Jones were looking for 2.3% in the April-through-June stretch.

Starbucks shares climbed 5% after the coffee chain posted stronger-than-expected revenue for the third fiscal quarter, which boosted confidence in the company’s turnaround efforts. On the other hand, Visa slipped 2% despite quarterly results coming in better than expected.

Investors remain largely on standby ahead of the Fed’s interest rate decision on Wednesday afternoon and awaiting earnings from “Magnificent Seven” firms Meta Platforms and Microsoft. Shares of both technology stocks were marginally higher in the premarket.

The major averages were weighed down as the progress of U.S. trade talks with China became shaky. U.S. negotiators ended discussions with Beijing, and the potential extension of a pause on higher China tariffs remained uncertain. A postponement of these higher rates won’t be final until President Donald Trump signs off on the plan, U.S. negotiators said. Trump on Wednesday asserted that his Friday deadline is firm, and also said India will now pay a 25% tariff.

Investors anticipate the Federal Reserve will hold interest rates steady Wednesday afternoon. Fed funds futures are pricing in a nearly 98% likelihood of the central bank keeping its key rate at a range of 4.25% to 4.5%, according to CME Group’s FedWatch tool.

“Despite increased political scrutiny, Fed Chair Jerome Powell continues to signal patience around any interest rate decision,” said Jerry Tempelman, vice president of fixed income research at Mutual of America Capital Management. “Financial markets do not anticipate any change in monetary policy from the Federal Reserve until at least September.”

Following the decision, traders will turn to a press conference with Powell for insights into the path of monetary policy. This comes as President Trump and allies have tried to pressure the central bank leader to bring the borrowing cost down.

They’ll also follow the continued stream of earnings reports. Etsy will provide its quarterly results before the bell on Wednesday, followed by Ford and Robinhood after the market close.