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US stocks edged higher on Wednesday, with the prospect of the US joining Israel-Iran hostilities keeping investors on edge as they braced for the Federal Reserve's interest rate decision later in the day.
The Dow Jones Industrial Average (^DJI) rose 0.1% and S&P 500 (^GSPC) added less than 0.1%. The Nasdaq Composite (^IXIC) rose about 0.2%.
Markets are on alert for any sign that the US has joined the Middle East conflict, which has swung stocks around since it broke out last week. President Trump said, "Our patience is wearing thin," and met with his national security team on Tuesday, raising speculation that the US could join Israel's offensive. Iran has warned it will respond firmly if the US crosses a red line into involvement and has reportedly readied missiles for strikes on US bases in the region if it does.
Oil prices moved over 1% higher, reversing course after the morning's decline. Brent futures (BZ=F), the international benchmark, rose to above $77 a barrel while West Texas Intermediate (CL=F) crude traded just above $76.
Read more: The latest on Trump's tariffs
Against that background, attention is turning to the Fed's policy decision due at 2 p.m. ET, when the central bank is expected to hold interest rates steady. The focus is on the "dot plot" to shed light on whether two rate cuts are still on the table this year. Investors will watch Chair Jerome Powell's press conference for insight into pressures on the economy amid Trump's tariffs and trade push.
Meanwhile, weekly jobless claims remained near their highest level in eight months.
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Federal Reserve holds interest rates steady, projects 2 more cuts in 2025
The Federal Reserve held interest rates steady in a range of 4.25% to 4.5%.
The central bank also released its latest Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future.
The median official's forecast for the federal funds rate at the end of 2025 was 3.9%, which would likely represent two 25 basis points cuts this year. As part of the Fed's SEP, officials marked up their projections for core inflation and lowered their forecast for economic growth in 2025. The Fed now also sees the "core" PCE inflation hitting 3.1% in 2025 up from a prior forecast of 2.8%.
Stocks slightly higher as investors await the Fed
Less than 30 minutes before the Federal Reserve is set to release its next policy update, the Dow Jones Industrial Average (^DJI) rose 0.1% and S&P 500 (^GSPC) added less than 0.1%. Meanwhile, the Nasdaq Composite (^IXIC) added about 0.2%. All three major averages had been up about 0.6% at one point in the trading day.
The 10-year Treasury yield (^TNX) was down about three basis points to hover near 4.36%.
Watch out for the last hour of trading
As we often note, most of the stock swings on Fed days typically comes after Federal Reserve chair Jerome Powell's press conference starts at 2:30 p.m. ET.
But specifically the last hour of trading has been where the market action is as of late. Research from Bespoke Investment Group shows that since all Fed meetings since 1994 the S&P 500 (^GSPC) has dropped an average of six basis points in the final hour of trading. But across the past 10 meetings, those losses have worsened with the S&P 500 falling more than 41 basis points on average.
This included eight straight meetings that saw the S&P 500 fall in the final hour trading leading into the March meeting when the S&P 500 rose 10 basis points in the final hour of trading.
Mortgage rates are still stuck north of 6.8%
Yahoo Finance's Claire Boston reports:
Mortgage rates drifted slightly lower but remained above 6.8% for another week as the Treasury yields they closely track oscillated.
The average 30-year mortgage rate was 6.81% for the week through Tuesday, down from 6.84% a week earlier, according to Freddie Mac data. The average 15-year mortgage rate was essentially unchanged at 5.96%, from 5.97%. This week’s data collection period was a day shorter than normal to account for Thursday’s Juneteenth holiday.
This week’s rate is the lowest in four weeks, but mortgage rates haven’t been able to break out of a narrow range between 6.8% and 7% since April.
This week, the 10-year Treasury yield, which closely tracks mortgage rates, whipsawed and, ultimately, dropped slightly in response to the Israel-Iran conflict and a contraction in retail sales in May as consumers remain jittery about tariffs and their financial positions.
All eyes on Fed's 'dot plot' as investors look for rate cut clues
Yahoo Finance's Jennifer Schonberger reports:
The Federal Reserve is widely expected to hold rates steady at the conclusion of its policy meeting Wednesday, but the big question is whether Chairman Jerome Powell and his colleagues will stay committed to two rate cuts in 2025.
The answer will come in the form of the "dot plot," a chart updated quarterly that shows each Fed official's prediction about the direction of the central bank's benchmark interest rate.
The last dot plot, released in March, revealed a consensus among Fed officials for two cuts this year as some were already factoring the uncertainties of President Trump's economic policies into their projections. They made the same prediction last December.
Many Fed watchers expect central bank officials to stick with what they have already signaled as they weigh numerous unknowns, including the ultimate outcome of trade policies and the ripple effects triggered by a new conflict between Israel and Iran.
"I think they'll end up keeping two cuts, but will stick with narrative that they need more time to see effects of tariffs on inflation," Wilmington Trust senior bond fund manager Wilmer Stith said.
Circle rises 15% as Senate passes stablecoin regulation
Circle (CRCL) stock rose 15% on Wednesday as the US Senate passed a bill to regulate the sector.
The stablecoin issuer has now seen its shares soar more than 460% since its IPO in early June.
Marvell Technology stock pops 8% as Wall Street grows more bullish
Marvell Technology (MRVL) stock rose roughly 8% on Wednesday as investors digested the company's AI event.
"We continue to like MRVL as the rising tide of AI capex can help drive potential upside for one of the few franchises with a singular data-center focus, and with breadth of leading IP across compute, XPU, networking, electro-optics, security, and memory/storage," Bank of America analyst Vivek Arya analyst wrote in a note to clients on Wednesday while boosting his price target to $90 from $80.
Housing starts hit lowest level in five years
Housing activity remains in the doldrums.
Privately owned housing starts declined 9.8% in May to hit 1.256 million, the lowest level in five years, according to data from the Census Bureau on Thursday.
"Housing starts are running below the level of housing completions," Renaissance Macro head of economics Neil Dutta wrote in a note to clients on Wednesday. "This means that units under construction will continue to decline."
Citi economist Veronica Clark pointed out in a note to clients that the weak housing starts data could also be a bad sign for future employment in the sector.
"As construction declines, we continue to see downside risks to employment in this sector," Clark wrote.
Stocks stall at the open
US stocks wavered on Wednesday, with the prospect of the US joining Israel-Iran hostilities keeping investors on edge as they braced for the Federal Reserve's interest rate decision later in the day.
The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) were all within less than 0.1% of the flat line at the open.
Weekly unemployment claims hover near 8-month high
Weekly claims for unemployment benefits remained near their highest level in eight months during the second full week of June, while the number of Americans filing for unemployment insurance on an ongoing basis also remained near the highest level since November 2021.
Data from the Department of Labor released Thursday morning showed 245,000 initial jobless claims were filed in the week ending June 14, down from 250,000 seen the week prior and in line with economists' expectations.
Meanwhile, 1.945 million continuing claims were filed. This marked a slight move down from 1.951 million the week prior, which had been the highest level since November 2021. Economists see an increase in continuing claims as a sign that those out of work are taking longer to find new jobs.
Circle stock gains after stablecoin legislation advances in Congress
Shares of the largest US stablecoin issuer, Circle (CRCL), popped 3% after the Senate passed new legislation that would establish a framework for dollar-backed cryptocurrencies known as stablecoins.
The GENIUS Act still needs to move through the House and President Trump before it's signed into law, but the bill's passage in the Senate was heralded as a win for the crypto industry, which has been pushing for clearer and more positive regulation.
“I feel really good about [this bill],” Dante Disparte, chief strategy officer and head of global policy and operations at Circle, told Yahoo Finance's David Hollerith and Jennifer Schonberger.
Circle stock debuted on the public markets on June 5 in an explosive IPO. Since its debut, Circle stock is up more than 380%.
Hasbro stock falls after toymaker cut 3% of workforce
Toymaker Hasbro (HAS) announced Tuesday it cut 3% of its global workforce, or about 150 employees, as part of a larger cost-cutting effort. The stock fell 3% in premarket trade on Wednesday.
The Monopoly maker has been navigating President Trump's tariffs and trade war, especially with China, where it sources about half of its toys and games. The company is working to diversify its supply chain. and reduce its exposure to China.
"Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs, and reduced profits for our shareholders," Hasbro's CEO Chris Cocks said during an earnings call in April, per Reuters.
Trending tickers: AMD, Tesla and Micron
Here are some top stocks trending on Yahoo Finance in premarket trading:
AMD (AMD) stock rose over 1% in premarket trading on Wednesday, following the news it plans to partner with Microsoft to develop custom chips to power the next range of Xbox systems.
Tesla (TSLA) stock was up before the bell today. A Bloomberg report on Wednesday said that Elon Musk's artificial intelligence startup xAI was burning through $1B a month as costs of building its AI models increased.
Micron (MU) shares rose 1% today in premarket trading, following Wells Fargo analysts maintaining a Buy rating for the tech stock and a price target of $130.00.
Investors still aren't buying this stock rally
The S&P 500 (^GSPC) is back trading near record highs, but there's still skepticism on Wall Street, Yahoo Finance's Allie Canal reports:
Good morning. Here's what's happening today.
Nintendo stock hits record as sales of Switch 2 boom amid tariff risks
Oil gains maintained with potential US involvement in Israel-Iran conflict in focus
Oil is holding gains after spiking to a five-month high on Tuesday. Concerns over the US joining the ongoing conflict between Israel and Iran continue to bolster the value of the commodity.
Bloomberg reports:
Brent (BZ=F) traded above $76 a barrel after closing 4.4% higher in the previous session, while West Texas Intermediate (CL=F) was near $75. President Donald Trump met with his national security team on Tuesday, after demanding Iran’s “UNCONDITIONAL SURRENDER” and warning of a possible strike against the country’s leader — Ayatollah Ali Khamenei — in a social media post.
Iran’s crude-exporting infrastructure has been spared so far, and most of the fallout has been confined to shipping. The Middle East produces around a third of the world’s oil and a wider conflict could drive prices even higher.
The biggest concern for the oil market centers on the Strait of Hormuz, although there are no signs that Iran is seeking to disrupt shipping through the narrow waterway. About a fifth of the world’s daily crude output passes through the strait at the entrance to the Persian Gulf.
