Markets Dive After the Fed Holds Steady

Summary of Markets Dive After the Fed Holds Steady

by The Wall Street Journal

11m•July 29, 2026
Listen to Episode

Overview of Markets Dive After the Fed Holds Steady

In this episode of What's News from The Wall Street Journal, the focus is on a Federal Reserve decision to keep interest rates unchanged even as internal pressure mounts to fight inflation more aggressively. The show also covers Anthony Fauci’s contentious Senate hearing, a radical new aircraft design backed by JetZero and U.S. financing, and major corporate earnings from Procter & Gamble, Microsoft, and Meta.

Federal Reserve Holds Rates Steady, But Dissent Grows

The Fed left interest rates unchanged, but the decision was not unanimous: three regional Fed presidents voted for a quarter-point hike, signaling growing concern that inflation has stayed above target for too long.

Key takeaways

  • Inflation remains the central issue driving debate inside the Fed.
  • The dissenting voters want stronger action to show the central bank is serious about getting inflation down.
  • The Fed chair emphasized that long-term market rates have been rising on their own, suggesting markets may already be doing some of the tightening work.

Market reaction

  • Investors initially welcomed the Fed’s stance, but sentiment reversed as worries about inflation intensified.
  • Stocks sold off sharply:
    • Dow: down more than 1,100 points
    • S&P 500: down 1.5%
    • Nasdaq: down 1.7%
  • The 10-year Treasury yield rose to around 4.67%, reflecting inflation concerns.

What to watch next

The September meeting could be shaped by:

  • July and August inflation reports
  • July and August jobs reports
  • Whether markets continue pushing rates higher on their own

Fauci Faces Intense Senate Scrutiny

Dr. Anthony Fauci appeared before the Senate and repeatedly invoked the Fifth Amendment during a three-hour hearing centered on his handling of the COVID-19 pandemic.

Key points

  • Republicans grilled Fauci after Senator Rand Paul released Fauci’s private pandemic-era journals.
  • Fauci said he had already testified or briefed Congress more than 200 times.
  • He accused Paul of mounting a campaign of slander against him.
  • He declined to answer even basic questions, invoking the Fifth more than 100 times.

Broader context

  • Paul has accused Fauci of misleading the public on school closures and the origins of COVID-19.
  • Fauci had previously received a preemptive pardon from President Biden.
  • Florida’s attorney general later announced an investigation into Fauci.

JetZero’s “Manta Ray” Plane Could Reimagine Air Travel

The episode also explores JetZero’s effort to build a radically different commercial aircraft, shaped more like a manta ray than a traditional tube-and-wing jet.

Why it matters

  • The aircraft uses a blended wing body design.
  • JetZero says the design could improve fuel efficiency by 30% to 50%.
  • The company just received potential access to up to $3 billion in fast-tracked U.S. government loans to help build its first factory.

What’s different for passengers

  • The plane would feature a quad-aisle layout.
  • It would feel more spacious than a conventional jet.
  • Each seat would reportedly have its own overhead bin.
  • Toilets would include dedicated waiting areas, reducing aisle congestion.

Main challenge

  • Even if the design is innovative, the aviation industry is built around the standard tube-and-wing configuration.
  • A major hurdle is whether airports, regulators, and airlines can adapt to the new shape.
  • JetZero is trying to ease certification by using many existing, already-approved components.

Corporate Earnings: P&G, Microsoft, and Meta

The episode closes with several major earnings updates:

Procter & Gamble

  • Gave a cautious outlook for its new fiscal year.
  • Said it expects a $1 billion hit from higher costs tied to the Iran war.
  • Projected 1% to 3% sales growth, below Wall Street’s expectations.
  • Shares fell nearly 2%.

Microsoft

  • Reported 18% revenue growth to $90 billion for the quarter ending in June.
  • Profits rose 31% to $35.8 billion.
  • Results beat Wall Street expectations.

Meta

  • Posted record quarterly revenue of $60.8 billion.
  • Still, weaker free cash flow raised concerns about the cost of its AI investment spree.
  • Shares dropped in after-hours trading.

Bottom Line

This episode centers on a key macro theme: the Fed is under pressure to get tougher on inflation, and markets are increasingly uneasy about whether it will. Beyond the Fed, the show highlights political conflict over Fauci, a bold bet on next-generation aviation, and a mixed batch of corporate earnings that underscore how costs and AI spending are shaping investor sentiment.