US Stock Market Crashed: Dow Jones Collapses 1,150 Pts, Worst Since April 2025; Nasdaq Falls 435 Pts; Why?

The US stock market crashed sharply on July 29th, despite the US Federal Reserve keeping interest rates unchanged in line with street estimates. The Dow Jones collapsed by over 1,150 points, which is the worst single-day performance since April 2025. Also, the tech-heavy index, the Nasdaq Composite, fell by over 433 points. While the S&P 500 index plunged over 1.5%. The key reason behind the extreme bearish trend is the dissent of 9-3 between FOMC members, signaling a higher chance of a rate hike in September 2026 policy.

Dow Jones Industrial Average

The DJIA index nosedived by 1,153.18 points or 2.2% to close at 51,594.14, which was near its intraday low of 51,551.18 on July 29.

According to a Charles Schwab report, the Dow Jones was poised to fall on Wednesday as investors digested a wave of earnings reports ahead of the Federal Reserve's interest rate decision this afternoon. Oil prices rose on renewed hostilities in the Middle East.

"Investors have turned more skeptical toward hyperscalers and will be seeking clearer evidence that spending discipline, monetization, and free cash flow can support valuations," said Schwab's report.

Among heavyweight stocks on the Dow Jones, the Goldman Sachs tumbled by over 5%, while Nvidia, JP Morgan and Boeing plummeted by 3-4%.

Nasdaq Composite

The Nasdaq index plunged by 433.97 points or 1.74% to close at 24,442.94. This was also near the intraday low of 24,425.34.

In after-hours trading, Microsoft jumped 9% after reporting results that topped analysts' expectations, with strength driven in part by its cloud computing and artificial intelligence businesses. Meanwhile, Meta Platforms fell more than 6% as investors remained concerned about the company's ability to monetize its AI investments. Attention now shifts to earnings from tech giants Amazon and Apple later Thursday, along with results from major companies including Mastercard, Bristol-Myers, and Coinbase, as per Trading Economics.

Lastly, the S&P 500 index slipped by 112.63 points or 1.52% to close at 7,316.15.

US Fed Policy:

"Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little," FOMC said in its policy statement.

Also, it added, inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy.

"The Committee will deliver price stability," FOMC said.

Accordingly, the Fed committee decided to keep the target range for the federal funds rate at 3.5% to 3.75%.

During the press conference, Fed chair Kevin Warsh said, "The committee remains resolute. You've heard this before, but we will maintain price stability."

The risk for the Fed is that inflationary pressures—including tariffs and the AI buildout—might keep growing while it waits for more data. Given the volatility in the Middle East, oil prices might also surge again, remain elevated, and start driving broader price increases. So far, though, inflation expectations, a key Fed concern, remain well-anchored, as per Schwab's report.

What To Expect Ahead For Global Markets?

"Wall Street ended sharply lower ahead of earnings from major U.S. technology companies, reflecting persistent concerns over AI-related valuations and elevated capital spending, while Asian markets are trading with a modest positive bias in early trade, offering little directional conviction," said Ponmudi R, CEO of Enrich Money.

On the policy outcomes, Ponmudi highlighted that while the decision removes a key near-term uncertainty for global markets, the split among policymakers reinforced expectations that the path of future rate cuts remains highly data dependent. Investors will now closely monitor upcoming U.S. inflation and economic growth data for fresh clues on the Fed's policy trajectory.

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