Stock indexes closed lower due to hawkish inflation remarks from Fed Chair Powell.
From Nasdaq
June 18, 2025 6:52:00 pm:
Stock indexes closed lower on Wednesday, with the S&P 500 down -0.03%, Dow Jones down -0.10%, and Nasdaq flat. Hawkish comments from Fed Chair Powell led to long liquidation in equities. The FOMC left rates unchanged but projected two 25-bp cuts this year, with a lowered US growth forecast and raised inflation forecast.
Geopolitical tensions between Israel and Iran limited stock gains. President Trump’s announcement of a potential meeting with his security team to discuss the conflict spurred speculation. No signs of easing hostilities were seen, with Iran denying outreach for negotiations. US jobless claims falling as expected provided some support.
Concerns over Iran’s attacks on Israel led to speculation of US involvement. The Strait of Hormuz, vital for global crude shipments, faced disruptions, with over 900 vessels affected by Iranian signal jamming. US mortgage applications fell, with the 30-year fixed-rate mortgage dropping to 6.84% from 6.93% the previous week.
US weekly initial unemployment claims met expectations at 245,000. Housing news was weaker than expected, with May starts falling to a 5-year low and building permits unexpectedly dropping to a 4-3/4 year low. The FOMC kept rates unchanged but revised GDP and inflation estimates for 2025.
Fed Chair Powell anticipates inflation from tariff impacts. President Trump’s plan to impose unilateral tariffs within a week raised concerns. The market predicts a 10% chance of a -25 bp rate cut at the July FOMC meeting. Overseas markets closed mixed, with Euro Stoxx 50 down, Shanghai Composite up, and Nikkei Stock 225 rising.
T-notes closed lower on hawkish comments from Powell and the FOMC’s raised inflation forecast. European government bond yields declined. ECB member Panetta highlighted economic risks from US tariffs and Middle East tensions. UK CPI eased slightly in May, while swaps show a 7% chance of an ECB rate cut in July.
Stock movers included credit card issuers and payment companies declining due to concerns over stablecoins. Bitdeer Technologies fell after announcing convertible notes offering. Zoetis Inc led S&P 500 losers, while Coinbase Global partnered with Nodal Clear, boosting its stock. Marvell Technology raised its data center market estimate, and bank stocks rallied on eased capital rules for Treasury trades.
Jabil rose after an upgrade, while Nucor led S&P 500 gainers with strong Q2 EPS forecast. Wells Fargo gained after a price target increase. Oracle saw an increase after a price target raise. Earnings reports for June 20 include Accenture PLC, CarMax Inc, Darden Restaurants Inc, and Kroger Co.
Read more at Nasdaq: Stocks Erase Early Gains on Fed Chair Powell’s Inflation Remarks