The US stock futures traded with modest gains on Wednesday, 17 June, as investors awaited the Federal Reserve’s first monetary policy decision under Chair Kevin Warsh.
Futures tied to the S&P 500 were little changed, while Nasdaq 100 futures rose 0.6%. Dow Jones Industrial Average futures were largely flat.
The three major US indices ended mixed on Tuesday following a sharp rally earlier in the week that was driven by optimism surrounding a potential US-Iran peace agreement, which sent oil prices tumbling and eased inflation concerns.
The Federal Reserve is widely expected to leave interest rates unchanged, but investors will closely monitor the central bank’s forward guidance and updated economic projections. Policymakers are expected to maintain the federal funds rate in the 3.50%-3.75% range at the conclusion of the meeting.
The Fed meeting comes at a time when inflation remains elevated following a recent surge in energy prices caused by tensions in the Middle East, which kept crude oil prices higher for an extended period.
The meeting will also mark the first policy decision chaired by Kevin Warsh, with investors closely watching whether he submits a “dot” in the Federal Open Market Committee’s quarterly Summary of Economic Projections, which outlines policymakers’ expectations for the future path of interest rates.
Oil prices have slumped on expectations that a US-Iran agreement to reopen the Strait of Hormuz could boost global supply and ease inflationary pressures, prompting investors to reassess the outlook for interest rates ahead of the Fed decision.
While traders have pared back their most aggressive expectations for rate hikes, markets are still pricing in a full quarter-percentage-point increase by the end of the first quarter of 2027.
Last week, the European Central Bank became the first major central bank to raise interest rates in response to inflationary pressures driven by the conflict in Iran.
On the geopolitical front, the US and Iran are reportedly preparing to formally sign a memorandum of understanding on June 19 in Switzerland, according to Bloomberg.
However, uncertainty remains after US President Donald Trump said the memorandum of understanding with Iran was not yet final and warned that military action could resume if negotiations fail.
“The Federal Reserve’s policy announcement is expected to be the week’s biggest market catalyst. Investors will be looking for signals on inflation, growth, and future rate cuts under Chair Kevin Warsh. Falling oil prices have improved the inflation outlook, but markets remain sensitive to any shift in the Fed’s tone as policymakers assess the balance between cooling price pressures and resilient economic growth,” said domestic brokerage firm Vested Finance.
Crude oil slips to three-month low
Crude oil prices continued to drift lower amid expectations of a US-Iran agreement that could quickly bring additional supply back to the global market. After plunging 5% on Tuesday, Brent crude futures fell another $1.30 per barrel, touching their lowest level since March 2. Before the conflict began, Brent crude was trading around $73 per barrel.
US crude futures also dropped to their lowest level in more than three months, extending their losing streak to a fifth consecutive session and falling below $75 a barrel. Since the escalation of the conflict in late February, the Strait of Hormuz has remained effectively closed.
A full reopening of the vital shipping route would provide significant relief to major Asian economies and could push oil prices substantially lower, given that the waterway handles roughly one-fifth of global oil and LNG shipments.
US stocks in focus today
Among individual stocks, shares of Elon Musk’s AI and rocket company SpaceX rose after the company surpassed Amazon in market value on Tuesday to become the fifth-most valuable company in the world.
Furniture maker La-Z-Boy climbed 15.7% after reporting fourth-quarter sales and profit that exceeded analysts’ estimates.
CarMax gained 3.6% after posting better-than-expected first-quarter revenue.
Meanwhile, semiconductor stocks traded higher ahead of the opening bell, with Broadcom, Micron Technology, Advanced Micro Devices and Intel rising between 1.5% and 3.5% in pre-market trading, Reuters reported.
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