Unsettling optimism held key equity indexes above breakeven for most of the final runup to the release of the Federal Open Market Committee’s monetary policy statement, and gave birth to a press conference by Chairman Jerome Powell.
Speaking to White House reporters on Tuesday morning, President Donald Trump showed both a lack of desire to widen the conflict between Israel and Iran and his commitment to destroy the latter’s nuclear capabilities.
President Trump did not directly answer questions about whether the US would attack Iran’s nuclear facilities. “I might do that,” he said. “I might not do that. I mean no one knows what I’m trying to do.”
Subscribe to Kiplinger’s personal finances
Be smarter, better informed investors.
Save up to 74%
Sign up for Kiplinger’s free e-newsletter
Remember profits and prosperity with expert advice on investments, taxes, retirements, personal finances and more – directly to email.
Profit and prosperity with the advice of the best experts – directly to your email.
Trump also said, “Nothing too late” when asked if negotiations had passed.
When the spotlight time finally arrived this afternoon, the central bank, as expected, maintained its federal funding target range from 4.25% to 4.50%.
“The net export swing has affected the data,” FOMC said at the top of its policy statement.
Policymakers point out that unemployment remains low and labor market conditions remain strong, but inflation is “slightly rising.” The Fed’s “dot plot” — or an overview of economic forecasts — shows two interest rate cuts in 2025.
While avoiding specific questions about Trump, Chairman Powell highlighted the Fed’s focus on the data that is coming in, highlighting the still robust impact of the administration’s tariff policy on inflation and employment.
We continue to track news and developments surrounding Powell’s press conference on the FOMC conference and live Fed blog.
More mixed data
Before opening bell Wednesday, the Labor Bureau reported that initial unemployment claims fell from 5,000 to 245,000 for the week that ends June 14th.
Continued billing for the week ending May 31st increased by 70,748 from the previous week, up from 1.73 million in comparable week in 2024.
“The continued bills, useful proxy for the worst part of unemployment (through permanent layoffs), have risen for quite some time,” explains Guy Berger, guild’s labor market economist and senior fellow at the Burning Glass Institute, but the rate of growth accelerated a bit in May.”
The concern is whether it represents “this small acceleration will be the end of it” or “down payment for a bigger, more disorderly rise.”
At the same time, the Census Bureau reported that housing declined 9.8% to 126 million from April to May, down 4.6% from the previous year.
Building permits fell 2% compared to April, down to 1.39 million, down 1% from 1.41 million the previous year.
Wells Fargo economists Charlie Dorgerty, Jackie Benson and Ali Hajibeige cite high funding costs for a homebuilding pullback, rising economic uncertainty and adverse supply conditions.
“Housing construction has been relatively resilient in limiting monetary policy over the past few years,” writes the Wells Fargo team. “However, the high-interest rate environment appears to be putting a lot of downward pressure on activity right now.”
At the closing bell, Dow Jones Industrial Average returned from 0.1% to 42,171, with the S&P 500 surrendering to 5,980 to under 2 points, and the NASDAQ composite went on to 0.1% to 19,546.
Note that both the stock and bond markets will be closed tomorrow with compliance in June.
Hasbro stocks will rise after layoff announcement
Hasbro (Has) CEO Chris Cocks acknowledged during a toy maker’s conference call in April that discretionary stocks faced tariff-related pressures.
“In the end,” explained Cock, “Taxes lead to rising consumer prices and potential unemployment.” Hasbro gets about half of the products it sells in the US from China.
Later Tuesday, Hasbro announced that it would fire 3% of its workforce (a total of about 150 employees), according to the Wall Street Journal. “We are in line with our long-term goals,” said Hasbro spokesman Roberta Thomson.
3.3% was released on Tuesday. However, it bounced off on Wednesday, rising 0.6% to surpass all three major stock indices.
