Wall Street drops on weak data and Fed policy concerns

📉 Major indices fall

• Dow Jones: -0.95%

• S&P 500: -0.83%

• Nasdaq: -1.12%

Losses accelerated after weaker-than-expected reports from the services and manufacturing sectors, raising concerns about a potential economic stagnation with no imminent relief from high borrowing costs.

📊 Weak economic data signals slowing growth

The ISM Services Index fell to 52.3 in July, below forecasts of 53.0. While still in expansion territory, the slower pace disappointed markets. Meanwhile, rising inventories in the industrial sector indicated a cooling production environment.

“The numbers point to a slowing economy—not weak enough for rate cuts, but certainly a red flag,” said Bloomberg Economics.

🏦 Fed may keep rates elevated longer

With inflation still above target and job markets resilient, economists predict the Federal Reserve could delay any rate cuts, possibly maintaining high interest rates well into 2026.

This prospect continues to pressure tech stocks and interest-sensitive sectors.

💬 What analysts are saying

Goldman Sachs described the current sentiment as a “reality check” after weeks of bullish expectations. Bank of America, meanwhile, maintains its view that a mild recession remains a real possibility.

Regional banks and cyclical companies were among the session’s biggest losers.

🔍 What should investors do?

• Diversify portfolios to limit exposure to volatile sectors

• Monitor key inflation data and employment reports

• Focus on companies with strong fundamentals and healthy cash flows

Conclusion: Caution is key

Wall Street is undergoing a sentiment shift as economic uncertainty builds. Investors are advised to stay alert, avoid emotional decisions, and track the Fed's guidance closely. Volatility is likely to persist until there’s more clarity on inflation and growth.