June 18th, 2025
Market Performance:
U.S. stocks inched higher in the morning as investors awaited the Fed decision. The conflict in the Middle East momentarily is put on the back burner as Fed rates are on the minds of most investors. Traders will have to wait until the 2 p.m. ET decision, though no rate change is expected. Asian markets finished mixed overnight, while Europe is lower, as eurozone CPI inflation for May held steady at 1.9% annualized. This was below expectations for 2.0%.
Economic Takeaways:
· The Federal Open Market Committee (FOMC) will conclude its June meeting today, with markets expecting the target range for the federal funds rate to remain unchanged at 4.25%-4.5%.
· Crude oil (/CL) extended its rally following a 5% surge on Tuesday, lifting energy stocks—the only sector to post gains.
· The S&P 500 slid about 0.8% on Tuesday but managed to stay above last Friday’s intraday lows, signaling possible resilience.
· Initial jobless claims dipped to 245,000, while housing starts and building permits both declined.
· The unemployment rate remains low at 4.2%, and 7.4 million job openings still exceed the 7.2 million people that are unemployed.
· Bond yields are down, with the 10-year Treasury yield at 4.36%.
· Bitcoin (/BTC) edged lower amid ongoing geopolitical uncertainty, even as the U.S. Senate passed a bill to regulate stablecoins. The legislation still needs approval from the House. Shares of Circle Internet Group (CRCL) rose 3.2% in pre-market trading on the news.
· Meanwhile, the Atlanta Fed’s GDPNow forecast for Q2 GDP growth was revised down to 3.5% from 3.8%, with another update expected later today.
· In housing data, U.S. housing starts for May came in at a seasonally adjusted annual rate of 1.256 million, while building permits totaled 1.393 million. Both figures missed expectations of 1.36 million and 1.41 million, respectively, and declined from April, with housing starts showing particular weakness.
· Iran has issued a warning that it will respond decisively if the U.S. crosses what it calls a red line by becoming directly involved, and reports indicate Tehran has prepared missiles for potential strikes on American bases in the region if that threshold is breached.
An Anticipated “Dot Plot”
The Federal Reserve is widely expected to keep interest rates unchanged when it wraps up its policy meeting on Wednesday. However, all eyes are on whether Chair Jerome Powell and fellow policymakers will maintain their projection for two rate cuts in 2025.
That guidance will come via the Fed’s updated “dot plot”—a quarterly chart that illustrates where each official sees the central bank’s benchmark interest rate heading.
In March, the dot plot showed a consensus for two cuts this year, with some policymakers already accounting for the uncertainties tied to President Trump’s economic agenda. The same outlook was presented last December.
Most Fed watchers believe the central bank will stick with its previous guidance as it navigates a range of unknowns, including the impact of evolving trade policy and fallout from the escalating conflict between Israel and Iran.
“I think they’ll end up keeping two cuts, but will stick with the narrative that they need more time to see effects of tariffs on inflation,” said Wilmer Stith, senior bond fund manager at Wilmington Trust.
Housing Starts Fall to Lowest Level in Five Years
The U.S. housing market remains sluggish, with new data showing a sharp drop in construction activity. Privately owned housing starts fell 9.8% in May to an annual rate of 1.256 million—the lowest level in five years, according to Thursday’s report from the U.S. Census Bureau.
“Housing starts are running below the level of housing completions,” noted Neil Dutta, head of economics at Renaissance Macro, in a Wednesday client note. “This means that units under construction will continue to decline.”
Citi economist Veronica Clark also flagged the potential ripple effects on employment, warning that the soft housing data could foreshadow job losses in construction. “As construction declines, we continue to see downside risks to employment in this sector,” she wrote.
Notables
· Marvell Technology (MRVL) gained 3.3% in early trading after offering an upbeat outlook at an AI-focused investor event.
· Nucor (NUE) rose 2.7% pre-market following the company’s fiscal Q2 earnings guidance, which exceeded Wall Street expectations.
· Reddit (RDDT) dipped 0.5% early Wednesday, pulling back slightly after a sharp rally Tuesday driven by the launch of its new AI-powered ad platform, “Community Intelligence.”
· Humana (HUM) was unchanged in pre-market action, holding onto gains from Tuesday after the Senate’s budget bill excluded proposed cuts to Medicare Advantage, a key revenue source for the insurer.
· Intel (INTC) edged up 0.3% following a report from The Oregonian stating the company plans to cut 15% to 20% of its Intel Foundry workforce.
· Analog Devices (ADI) climbed 1.2% after Cantor Fitzgerald upgraded the stock to Overweight from Neutral.
· Circle (CRCL) stock rose 15% on Wednesday as the US Senate passed a bill to regulate the sector. Shares have now soared more than 460% since its IPO in early June.
What’s Ahead
June 19: U.S. markets closed for Juneteenth holiday observance.
June 20: May leading indicators and expected earnings from Accenture (ACN), CarMax (KMX), Darden Restaurants (DRI), and Kroger (KR).
Next week is more crowded with earnings reports, with potential market-moving names like Nike (NKE), Micron (MU), and FedEx (FDX). These companies could give investors insights into retail demand, the trade war, and semiconductor trends.
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