The US stock market was poised for a flattish start on Tuesday, 16 June, as the bulls took a breather after a three-day rally and amid a shift in focus to the first US Federal Reserve policy meeting this week under new chair Kevin Warsh. The rally in AI and chip-related stocks continued amid heightened interest in tech stocks.
The futures of Dow Jones Industrial Average, which rose to a record high in the previous trade, traded 0.11% higher. Meanwhile, Nasdaq 100 futures gained 0.28% and S&P 500 futures were unchanged, up 0.056%.
The US stock market’s benchmark indices have seen healthy gains over the last few sessions amid the peace deal between the US and Iran, which has pushed crude oil prices lower, and the much-awaited listing of SpaceX.
Fed meeting outcome eyed
It’s a busy week of central bank decisions, with the Federal Reserve‘s policy meeting taking centre stage. The meeting assumes more importance as it comes following the resolution of the Middle East conflict that has been ongoing for over three months now.
Since the March meeting, the prolonged disruption in the Strait of Hormuz has kept energy prices elevated, increasing the risk that inflation remains above the Fed’s comfort zone for longer than previously anticipated. This will also mark Warsh’s first meeting as Fed Chair.
While rates are expected to remain unchanged, investors will be closely watching the Fed’s outlook on inflation, growth, and the path of future interest rate cuts, said Vested Finance.
Establishing credibility as the new Fed Chair will likely require maintaining a disciplined inflation-fighting stance while preserving policy flexibility, opined Nachiketa Sawrikar, fund manager at Artha Global Multiplier.
“We expect him to emphasise that a rate cut remains possible later this year, provided inflation continues to moderate alongside lower energy prices. Markets are likely to view Warsh’s first meeting positively, as it should reinforce continuity while preserving the possibility of future policy easing,” Sawrikar opined.
Oil prices ease
Oil prices have dropped to their lowest since early March, easing inflationary pressures just as policymakers assess interest rates.
Brent crude futures were down $2.02, or 2.4%, at $81.15 a barrel. The benchmark fell to $80.89 per barrel, the lowest since March 4, as per a Reuters report. US West Texas Intermediate was down $2.22, or 2.8%, at $78.53 a barrel, after dropping to $78.27, the lowest since March 10, the report added.
The prices had declined around 5% on Monday after Trump announced an interim deal to end the US-Israeli war with Iran, though full details have not been released. The conflict led to the closure of the Strait of Hormuz, which typically carries about one-fifth of global oil supplies.
The decline also prompted several major banks to cut their oil price forecasts, citing expectations that global energy flows could normalise faster than previously anticipated.
SpaceX skyrockets in early trade
In pre-trading session, SpaceX shares surged almost 10% as they extended their rally to the third day after their debut on Friday last week.
With today’s rise, the AI giant was on course to overtake Amazon in market value and become the world’s fifth-largest company. The stock is now up more than 50% since its public debut, making it one of the market’s strongest performers in recent weeks.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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