Rich Asplund
8 min read
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The S&P 500 Index ($SPX) (SPY) Wednesday closed down -0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed unchanged. June E-mini S&P futures (ESM25) are unchanged, and June E-mini Nasdaq futures (NQM25) are down -0.02%.
Stock indexes gave up early gains on Wednesday and closed slightly lower as hawkish comments from Fed Chair Powell sparked a wave of long liquidation in equities. Mr. Powell warned that tariff-driven economic uncertainty and inflation risk continue to complicate the Fed’s chances to ease monetary policy. The FOMC left interest rates unchanged following Wednesday’s policy meeting and continued to project two 25-bp rate cuts this year but cut their US growth forecast and raised their inflation forecast for this year.
Stock indexes initially moved higher on Wednesday in hopes of a de-escalation of the Israel-Iran war. President Trump announced on Wednesday that he will convene another meeting with his national security team to discuss the ongoing conflict in the Middle East. President Trump said Iran had reached out about the possibility of negotiations, a claim that the Iranian government later denied. Stocks also found support after US weekly jobless claims fell as expected.
Geopolitical risks are limiting the upside in stocks as hostilities between Israel and Iran entered a sixth day Wednesday with no signs of easing. An overnight meeting between President Trump and his national security team has bolstered speculation the US is close to joining Israel’s attacks on Iran after President Trump called for Iran’s “unconditional surrender.” Iran showed no signs of backing down and reiterated an intention to respond with force if the US were to get directly involved in Israeli attacks.
So far, there’s been no closure of the vital Strait of Hormuz that handles about 20% of the world’s daily crude shipments, although navigational signals from over 900 vessels moving through the strait have been disrupted due to “extreme jamming” of signals from the Iranian port of Bandar Abbas, which caused a collision of two tankers Tuesday near the Strait of Hormuz.
US MBA mortgage applications fell -2.6% in the week ended June 13, with the purchase mortgage sub-index down -3.0% and the refinancing mortgage sub-index down -2.1%. The average 30-year fixed rate mortgage fell -9 bp to 6.84% from 6.93% the prior week.
US weekly initial unemployment claims fell -5,000 to 245,000, right on expectations.
