Market Wrap | Federal Reserve Holds Rates Amid Market Volatility and Sector Shifts

On August 20, 2025, the U.S. stock market saw mixed performance with the S&P 500 index falling 0.24%, the Dow Jones Industrial Average rising 0.04%, and the Nasdaq Composite dropping 0.67%. This comes as the Federal Reserve's recent meeting minutes revealed a decision to keep interest rates unchanged at 4.25%-4.5%, indicating concerns over economic growth slowdown and sustained inflation risks. Additionally, the minutes highlighted vulnerabilities in the U.S. Treasury market, citing issues with market depth and increasing hedge fund involvement.

Based on the day's market performance, the technology sector, non-essential consumer goods sector, and communication services sector underperformed the S&P 500. Conversely, the utilities sector, healthcare sector, essential consumer goods sector, energy sector, materials sector, real estate sector, and financial sector all saw gains despite the overall market trend.

Tharimmune shares surged over 200%, driven by promising trial results and the FDA's fast-track designation, which significantly boosted investor confidence. Meanwhile, Novabay saw a rise of over 70%, following a $6 million investment and the appointment of David Lazar as CEO, strengthening its financial position. On the other hand, Elong Power experienced a significant drop of nearly 90%, while Star Fashion's stock price declined by nearly 80%, indicating waning investor confidence.

The Federal Reserve's recent meeting minutes revealed participants' concerns about the vulnerability in the U.S. Treasury market, including issues with dealer intermediation capacity and increased participation by hedge funds. Additionally, the minutes highlighted the fragility related to foreign exchange swaps and stablecoins, which could impact the financial system. The minutes also indicated that most committee members consider inflation risks to be greater than employment risks, with tariffs exerting upward pressure on goods price inflation. Meanwhile, HSBC raised Nvidia's target stock price from $125 to $200, reflecting increased optimism regarding the company's growth prospects. Furthermore, traders are speculating on substantial rate cuts at the upcoming Jackson Hole symposium, with expectations mounting for a potential 50 basis point reduction.