Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) fell from intra-day highs following the Fed’s interest rate decision.
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The Fed decided to maintain rates in a range between 4.25% and 4.50%, much to the annoyance of President Trump. Before the decision, Trump said “I’d do a much better job than these people. So anyway, we should be two points lower. It’d be nice to be two and a half points lower.”
In addition, the central bank also raised its 2025 core personal consumption expenditures (PCE) estimate, its preferred gauge of inflation, to 3.1% from 2.8% in a sign of persistent tariff-driven inflation.
Fed Chair Jerome Powell warned of a “meaningful” amount of inflation in the coming months during his press conference following the rate decision. He added that the true impact of tariffs on inflation is still uncertain, and that it would be wrong to assume a one-time impact on prices.
On the Israel-Iran conflict front, President Trump said that the U.S. would steer clear if Israel does a “good job,” although the possibility of U.S. involvement remains on the table. Trump added that the U.S. has a goal of keeping nuclear weapons out of Iran’s reach and said he believes that Iran was just a few weeks from having a nuclear weapon before Israel decided to strike its nuclear facilities.
In other news, a leading economic indicator is flashing a warning signal. Housing starts for May came in at 1.256 million on an annualized basis, the lowest figure since the peak of the coronavirus pandemic in May 2020 and falling by 9.8% month-over-month. Housing starts are viewed as a leading indicator given the large investment necessary to construct a home. It can also act as a sentiment indicator due to the significant price tags of homes. Economic uncertainty from tariffs, high mortgage rates, and a high inventory of homes contributed to the fall.
The S&P 500 finished with a 0.03% loss while the Nasdaq 100 inched higher by less than 0.01%.
