Where’s That Rising Wedge

A sharp retreat in U.S. equities followed by a late-session rebound dominated trading on 31 July 2025 after Federal Reserve Chair Jerome Powell reiterated that lingering inflation uncertainty, amplified by tariff-related price pressures, continues to limit policymakers’ scope to cut interest rates. The S&P 500 initially plunged on the remarks before buyers stepped in during the final hour, while the U.S. dollar advanced and bond yields showed a corresponding move.

Independent market analyst Monica Kingsley, who highlighted the risk of an intraday reversal ahead of the Federal Open Market Committee (FOMC) press conference, pinpointed the exact moment sentiment flipped in real time on social media. She later noted that the reversal was confirmed by broad-based buying that extended beyond mega-cap technology names to small-capitalization shares.

Fed Holds Steady, Cites Tariff-Driven Inflation Risks

The FOMC left its policy rate unchanged, maintaining the cautious stance adopted earlier in the year. During the subsequent press briefing, Chair Powell underscored that uncertainty about the path of inflation remains elevated, with tariffs exerting upward pressure on prices in several segments of the economy. The chair’s reference to “tariff-related inflation uncertainty” was interpreted by traders as evidence that the central bank is not prepared to initiate rate cuts in the near term.

The thrust of the message matched expectations held by several analysts, including Kingsley, who had warned clients that markets were vulnerable to a pullback if the Fed explicitly linked tariffs to a stickier inflation outlook. “Powell mentioning tariffs as a reason the Fed can’t cut was the trigger many feared,” Kingsley wrote in her daily commentary, noting that the statement would likely “remove the floor” from equity prices in the immediate aftermath.

Equities Tumble, Then Rally Into the Close

Stocks sold off sharply as soon as Powell finished answering questions. The benchmark S&P 500 registered a swift drop, mirroring declines in the Dow Jones Industrial Average and the Nasdaq Composite. Yet, as the session entered its final hour—often referred to on trading desks as the “power hour”—buying pressure emerged across a wide swath of sectors.

Kingsley flagged the turnaround on her Twitter feed, emphasizing that momentum had shifted once the index held above an intraday support level tracked by many technicians. “Bid just showed up across the board,” she posted, adding that breadth improved noticeably instead of relying solely on the largest technology stocks.

That late-day strength erased a meaningful portion of earlier losses and offered a reminder of the market’s resilience despite ongoing monetary policy headwinds. Even with the afternoon bounce, however, the S&P 500 still closed lower versus the prior session, underscoring how sensitive investor sentiment remains to any change in the Fed’s tone.

Dollar Strength Accompanies Shift in Rates Expectations

Simultaneous with the initial equity decline, the U.S. dollar resumed its upward trajectory, a move that typically reflects investors anticipating a comparatively tighter policy stance. Kingsley observed that the greenback’s surge added an extra layer of pressure on dollar-denominated assets, particularly commodities.

Bond yields, meanwhile, adjusted higher in tandem with the changing outlook for rate cuts. Short-term Treasury yields in particular were quick to re-price, reflecting the view that the timing of any policy easing has been pushed further into the future. While specific yield figures varied throughout the day, the direction of travel was consistent with the dollar’s advance and the Fed’s resolute message.

Small-Caps and Tech Names Offer Clues to Risk Appetite

The Russell 2000 index of small-capitalization companies tracked the broader market lower in the morning but participated in the afternoon recovery, signaling broader risk appetite returning as the session progressed. Kingsley focused on the action in small-caps and Treasury yields to gauge whether the rebound had staying power. “When Russell and yields move together off the lows, the reversal is usually real,” she told subscribers.

Within the technology space, Microsoft and Meta Platforms mirrored a pattern set earlier in the week by Alphabet. Google’s parent company had surprised investors with higher-than-anticipated capital expenditures—a detail that initially spooked markets but later received a more constructive reading as a long-term growth signal. Microsoft and Meta followed suit after the Fed briefing, adding to the day’s late-session stabilization.

Technical Backdrop: Searching for the Rising Wedge

The headline “Where’s That Rising Wedge” referenced by Kingsley refers to a frequently discussed bearish technical pattern characterized by upward-sloping trend lines that converge over time. A break below the lower trend line is often interpreted as a signal of impending downside. Despite analyst chatter about such a formation developing on major indexes, Thursday’s sequence—an abrupt drop followed by renewed demand—offered no clean confirmation of the pattern.

Kingsley noted that technicians will continue to watch whether price action carves out lower highs in the sessions ahead. For now, the absence of a decisive trend-line break keeps bulls and bears locked in a tactical battle, made more complicated by shifting expectations for monetary policy.

Analyst Services and Disclosures

Kingsley used the busy session to remind followers that her premium analytics service covers intraday trade signals across multiple asset classes, including stocks, bonds, precious metals, energy, industrial commodities and cryptocurrencies. She reiterated that her content serves educational purposes only and does not constitute a formal investment recommendation.

The analyst, who maintains an active presence on Twitter, YouTube and Telegram, emphasized the importance of combining timely economic news with disciplined technical analysis—a point underscored by the day’s rapid reversal. “Without context, the dump looked terrifying; without discipline, the reversal looked like a fake-out,” she remarked in her closing note to clients.

Context: Inflation, Tariffs and Policy Flexibility

Although Powell’s remarks did not break new conceptual ground, his explicit linkage of tariff-related costs to the inflation outlook serves as a reminder that geopolitical developments can quickly re-shape monetary policy calculations. Tariffs, which act as a de facto tax on imported goods, often feed into consumer prices and production costs. When those costs prove persistent, they complicate the Fed’s effort to bring inflation back to its target range.

By stating that tariff-driven uncertainty prevents the central bank from delivering rate cuts, Powell effectively set a higher bar for policy easing. Market participants will therefore scrutinize upcoming inflation prints for evidence that price pressures continue to abate despite tariffs. Absent clear progress, traders are likely to lean on incremental economic data and corporate earnings for directional cues.

Looking Ahead

Attention now shifts to the next wave of macroeconomic releases and corporate results. Traders will be especially focused on whether the late-session recovery observed on 31 July can build into sustained momentum, or if it proves to be a brief respite in a market still wrestling with policy and earnings uncertainty.

Many observers also plan to monitor how the stronger dollar reverberates through equity sectors sensitive to currency moves, such as multinational manufacturers and commodity producers. Likewise, fluctuations in Treasury yields will remain central to the valuation debate surrounding high-growth technology names that have played an outsized role in driving year-to-date performance.

Whatever the near-term trajectory, the events of Thursday reaffirm that monetary policy communication can trigger swift and sizable shifts across asset classes. For traders and longer-term investors alike, diligently tracking the interplay between Fed messaging, technical setups and cross-market signals appears as crucial as ever.