From Yahoo Finance: 2025-06-13 06:06:00

Investors are closely watching the Federal Reserve’s balancing act between a weakening labor market and above-target inflation. The S&P 500 has rebounded in recent months, but global stocks fell Friday after Israel and Iran military actions. The Fed’s two-day meeting will focus on whether interest rates will be lowered in the coming months.

Fed funds rate has been steady at 4.25%-4.50% since December. The Fed aims to maintain full employment and price stability. Market strategists are cautious about lowering rates too early, which could boost inflation expectations. The Fed last projected risks of higher inflation and unemployment in May.

Focus on Wednesday will be on updates to Fed officials’ projections about monetary policy and the economy. Economists are watching for any signs of unemployment projections moving higher, indicating softening in the labor market. Markets expect two rate cuts by year-end, with the next likely in September.

Investors are also keeping an eye on Trump’s selection for the next Fed chair and monthly retail sales data. Tariffs may impact consumer spending. Trade tensions between China and the U.S. continue, with a 90-day tariff pause ending soon. The S&P 500 is up 1.6% this year but remains off its record high.

Market vulnerability exists as the rally has been rapid. Continued trade developments and Fed actions will impact market movements. Analysts caution against anything that disrupts the current market narrative. The Wall St Week Ahead provides updates every Friday.

Read more: Fed meeting in focus as investors seek rate-path hints