An uneasy optimism held the major equity indexes above the breakeven line for most of the final run-up to the release of the Federal Open Market Committee's monetary policy statement and Fed Chair Jerome Powell's press conference.
President Donald Trump, speaking to reporters at the White House Tuesday morning, indicated both a lack of desire to expand the conflict between Israel and Iran and a commitment to destroying the latter's nuclear capability.
President Trump didn't directly answer a question about if the U.S. will attack Iran's nuclear facilities. "I may do it," he said. "I may not do it. I mean, nobody knows what I'm going to do."
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Trump also said "nothing's too late" when asked whether the time for negotiations had passed.
When its time in the spotlight finally arrived this afternoon, the central bank, as expected, maintained the target range for the federal funds rate at 4.25% to 4.50% – an anticlimax reflected in calm post-announcement price action.
"Although swings in net exports have affected the data," the FOMC said at the top of its policy statement, "recent indicators suggest that economic activity has continued to expand at a solid pace."
Policymakers note that unemployment remains low and labor market conditions remain solid, though inflation is "somewhat elevated." The Fed's "dot plot" – or summary of economic projections – shows two rate cuts happening in 2025.
While avoiding specific questions about Trump, Chair Powell emphasized the Fed's focus on incoming data and the still-uncertain effects of the administration's tariffs policy on inflation and employment.
We continue to track news and developments around the FOMC meeting and Chair Powell's press conference on our live Fed blog.
More mixed data
Before Wednesday's opening bell, the Labor Department reported that initial jobless claims declined by 5,000 to 245,000 during the week ending June 14.
Continuing claims for the week ending May 31 increased by 70,748 from the previous week to 1.85 million and are up from 1.73 million for the comparable week in 2024.
"Continuing claims, which are a useful proxy for the worst part of unemployment (due to permanent layoff) have been rising for quite a while," explains Guy Berger, a labor market economist at Guild and a senior fellow at the Burning Glass Institute, "but the rate of increase accelerated a little in May."
The worry, Berger writes, is whether "this small acceleration will be the end of it" or represents a "down payment on a bigger and more disorderly rise."
At the same time, the Census Bureau reported that housing starts fell 9.8% to 1.26 million from April to May and were down 4.6% year over year.
And building permits declined by 2% compared to April to 1.39 million and were down 1% from 1.41 million a year ago.
Wells Fargo economists Charlie Dougherty, Jackie Benson and Ali Hajibeigi cite high financing costs, elevated economic uncertainty and unfavorable supply conditions for the pullback in residential construction.
"Residential construction has been relatively resilient to restrictive monetary policy over the past several years," the Wells Fargo team writes. "However, the high interest rate environment now looks to be exerting greater downward pressure on activity."
By the closing bell, the Dow Jones Industrial Average inched back 0.1% to 42,171, the S&P 500 surrendered less than two points to 5,980, and the Nasdaq Composite advanced 0.1% to 19,546.
Note that both the stock and bond markets are closed tomorrow in observance of Juneteenth.
Hasbro stock rises after layoff announcement
Hasbro (HAS) CEO Chris Cocks conceded during the toy maker's conference call in April that the consumer discretionary stock faced pressures related to tariffs.
"Ultimately," Cocks explained, "tariffs translate into higher consumer prices and potential job losses." Hasbro gets about half of the products it sells in the U.S. from China.
Late Tuesday, Hasbro announced it was laying off 3% of its workforce, a total of about 150 employees, according to The Wall Street Journal. "We are aligning our structure with our long-term goals," Hasbro spokesperson Roberta Thomson said.
HAS shed 3.3% Tuesday. But it bounced back Wednesday, rising 0.6% to outperform all three major equity indexes.
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