Closing Recap 

U.S. stocks finished mostly lower in a choppy session dominated by the Federal Reserve’s policy meeting, as the Fed held rates steady but signaled a slower pace of future cuts amid higher inflation forecasts due to tariffs; gold edged higher, oil gained on Middle East tensions, while the dollar was firm and Treasury yields were mixed. 

Key Takeaways 

• Fed Holds Rates, Signals Fewer Cuts: The FOMC kept interest rates unchanged as expected. New projections showed officials still see two rate cuts in 2025 but slowed the pace of cuts for 2026 and 2027, citing tariff-driven inflation. 
• Stagflationary Fed Outlook: The Fed’s economic projections painted a somewhat stagflationary picture: slower growth (1.4% for 2025), higher unemployment (4.5% by year-end), and more persistent inflation (PCE at 3.0% for 2025). 
• Markets Chop on Fed, Iran News: Stocks initially pulled back on renewed Iran/Israel headlines an hour before the Fed, then turned lower during Powell’s press conference as he offered little new dovish guidance. 
• Powell Stresses Data Dependence, Forward-Looking Policy: Fed Chair Powell emphasized that policy remains data-dependent but also needs to be forward-looking, acknowledging the uncertainty around tariffs. 
• Economic Data Mixed: Weekly jobless claims eased slightly, but May housing starts tumbled sharply, indicating ongoing weakness in the housing sector. 
• Gold Edges Higher: Gold prices posted modest gains ahead of and through the Fed decision. 
• Oil Gains on Geopolitical Tensions: Crude oil prices rose, bouncing off morning lows as reports of further Iran/Israel attacks surfaced. 
• Dollar Firms, Yields Mixed: The U.S. dollar gained slightly, while Treasury yields were mixed, with the short end falling more on the revised Fed outlook. 

Market Overview 

U.S. equity markets navigated a volatile session today, ultimately finishing mostly in negative territory as investors digested the Federal Reserve’s latest policy decision and economic projections, alongside ongoing geopolitical tensions. The day was characterized by choppy trading as markets awaited and then reacted to the FOMC announcement and Fed Chair Jerome Powell’s subsequent press conference. 

Index	Up/Down	% Change	Last
DJ Industrials	-44.14	-0.001	42171
S&P 500	-1.86	-0.0003	5980
Nasdaq	25.18	0.0013	19546
Russell 2000	11	0.0052	2112

As widely anticipated, the Federal Reserve held its benchmark interest rate steady. However, the accompanying economic projections revealed a more cautious outlook. Officials still foresee two rate cuts in 2025, but they slowed the anticipated pace of easing in subsequent years (2026-2027), citing expectations of higher inflation stemming from the Trump administration’s tariff policies. The Fed’s updated forecasts painted a somewhat stagflationary scenario, with projections for slower economic growth (1.4% this year), a rise in unemployment to 4.5% by year-end, and inflation (PCE) remaining elevated at 3.0% through 2025. 

Stocks had already started to pull back an hour before the Fed decision on renewed headlines regarding the Iran-Israel conflict, with reports of significant missile and drone attacks from Iran. Markets turned definitively lower during Chair Powell’s press conference. Powell offered little in the way of fresh dovish signals, reiterating that monetary policy needs to be forward-looking and data-dependent, acknowledging the significant uncertainty created by tariffs. He indicated the Fed is prepared to “wait for greater clarity” before considering policy adjustments. Despite the somewhat hawkish tilt in projections and cautious commentary, markets took the developments largely in stride, finishing only modestly lower ahead of a U.S. market holiday tomorrow.

Economic Data

Economic data yesterday showed a slight improvement in weekly jobless claims but a significant and unexpected plunge in housing starts for May. 

• Weekly Jobless Claims: Fell to 245,000 from 250,000 prior, in line with consensus. The 4-week moving average climbed to 245,500. Continuing claims eased slightly to 1.945 million. 
• Housing Starts (May): Tumbled -9.8% m/m to a 1.256 million unit annualized rate (vs. +2.7% in April, below 1.357M consensus). Single-family starts +0.4%, but multifamily plunged -29.7%. 
• Building Permits (May): Fell -2.0% m/m to a 1.393 million unit rate (vs. -4.0% in April, below 1.428M est.). 

Commodities, Currencies, and Treasuries

Gold prices edged slightly higher, with August futures gaining $1.20 (+0.04%) to settle at $3,408.10 per ounce, holding steady through the Fed’s announcement. Crude oil prices rose, with WTI settling up $0.30 (+0.40%) at $75.14/bbl, bouncing off morning lows as fresh headlines regarding Iran-Israel attacks hit newswires, stoking supply concerns. Treasury yields were mixed but generally lower after the Fed’s statement and Powell’s press conference, particularly at the short end of the curve. The Fed’s projection for fewer rate cuts in the longer term but still two cuts this year likely influenced trading. The 10-year yield finished little changed around 4.399%. The U.S. dollar was little changed before inching higher during Powell’s press conference. Bitcoin prices dropped earlier in the day. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.3	USD/bbl	75.14
Brent	0.25	USD/bbl	76.7
Gold	1.2	USD/oz	3408.1
EUR/USD	-0.0014	USD	1.1465
USD/JPY	-0.08	JPY	145.17
10-Year Note	0.008	%	0.04399

Looking Ahead 

U.S. markets are closed tomorrow, Thursday, June 19th, in observance of a holiday. Trading will resume on Friday. Investors will continue to digest the implications of the Fed’s updated economic projections and policy stance. Geopolitical developments in the Middle East remain a key wildcard. When trading resumes, focus will likely turn to any further trade headlines and upcoming economic data, particularly inflation reports, to gauge the path of the U.S. economy and potential future Fed actions.