S&P 500 Gains Slightly, Markets Eye Fed
US stocks opened mostly higher on Wednesday (June 17), as investors awaited the Federal Reserve's interest rate decision and pored over the initial details of a Middle East peace deal. At 9:31 a.m. ET, the S&P 500 rose 0.1% to 7,516.89, the Nasdaq Composite gained 0.4% to 26,484.98, while the Dow Jones Industrial Average moved slightly above the flatline at 52,011.47.
These moves came after the major indexes closed mixed on Tuesday. The S&P 500 and Nasdaq fell, while the Dow set a new closing record. Market sentiment remained subdued as investors awaited the next catalyst after a busy start to the week, including the announcement of a tentative agreement to end more than three months of war in the Middle East.
Today's main focus is on the conclusion of the Fed's two-day meeting. The US central bank is expected to maintain interest rates in the 3.50% to 3.75% range in its first decision under new Chairman Kevin Warsh. Markets will be watching to see whether Warsh signals a neutral or more hawkish stance amid tensions between the White House's desire for a rate cut and the risk of inflation from energy prices.
Recent economic data has also reinforced concerns about the Fed's policy path. US retail sales rose 0.9% month-on-month in May, higher than expectations for a 0.5% increase. This data suggests consumer demand remains solid, potentially limiting the Fed's room to signal policy easing in the near future.
Investors are also awaiting the Fed's quarterly economic projections. BofA Securities analysts expect these projections to show higher inflation, lower unemployment, and no interest rate cuts this year. Some policymakers are even expected to include projections for an interest rate hike.
From the Middle East, media reports suggest the 14-point US-Iran framework includes a permanent ceasefire, including in Lebanon, the lifting of the US naval blockade, and the reopening of the Strait of Hormuz. The agreement will also form the basis for negotiations on Iran's nuclear program following the official signing ceremony on Friday.
One of the key provisions includes an immediate waiver of Iran's oil and petrochemical exports, along with other financial incentives such as the unfreezing of frozen assets and a regional reconstruction plan of approximately $300 billion. In return, Tehran will agree to a commitment not to pursue nuclear weapons and to neutralize its nuclear materials.
For the stock market, the main transmissions are energy, inflation, yields, and valuations. If the opening of Hormuz pushes oil prices down, inflation concerns could ease and provide support for risk assets. However, if the Fed signals that inflation still requires tighter policy for longer, stock gains could remain limited even as geopolitical risks begin to recede. (arl)
Source: Newsmaker.id
