Wall Street Rallies Cautiously as Fed Decision Looms Amid Global Uncertainty

18 June 2025

Wall Street began the trading day with a modest but steady rise, reflecting investor anticipation around the Federal Reserve's forthcoming interest rate verdict. The Dow edged up 0.18%, the S&P 500 gained 0.23%, and the Nasdaq advanced 0.26% by mid‑morning, signaling optimism tempered by geopolitical unease.

Markets are bracing for the Fed to hold interest rates in the 4.25–4.50% range at today’s meeting. Yet the focus isn’t just on steady policy. All eyes are on Chair Jerome Powell, whose remarks will shape expectations about inflation risk and future rate cuts. Money markets indicate traders are pricing in roughly 46 basis points of easing throughout the rest of 2025, with a 55% likelihood of a 25‑basis‑point cut in September.

Heightened uncertainty stems from the Israel‑Iran conflict entering its sixth day. Rising fears of a deeper U.S. involvement have weighed on sentiment, pushing the S&P and tech-heavy Nasdaq down by 2.5% and 3.3% from their record highs respectively, yet evidence of resilience remains in today’s small gains.

Energy and consumer discretionary sectors led the charge, each gaining around 0.6% among S&P industry groups while healthcare lagged slightly. Key earnings also influenced headline movers: Marvell Technology soared 8.7% as chip stocks rallied, Circle Internet surged 6.2% following U.S. Senate endorsement of stablecoin regulation, Scholar Rock climbed 17.4% on promising clinical trial news, and steelmaker Nucor rose 4.9% after delivering a strong Q2 profit forecast.

On the macroeconomic front, U.S. weekly jobless claims fell—suggesting a still‑resilient labor market while data also showed softening in other areas, pointing to slower economic growth .

Global markets mirrored this delicate balance. Crude oil prices eased from recent highs near $75 as traders weighed the potential for Mideast supply disruptions. Treasury yields slid slightly, reflecting anticipation of a steady Fed path. Overseas, Japan’s Nikkei advanced while Hong Kong’s Hang Seng declined, highlighting uneven risk sentiment

Analysts stress that whiskering through this geopolitical and economic crosswind, the Fed is signaling a cautious stance supported by data. Surveys show GDP forecasts for 2025 have dropped to around 1.3%, inflation remains elevated above target, and U.S. tariffs pose ongoing inflationary risks. These factors justify the jury‑rigged posture of awaiting further clarity before cutting rates.

Despite pressure from President Trump calling for immediate rate relief, Fed officials appear undeterred. Instead, they’re likely to maintain their data-dependent stance, revealing updated forecasts in the “dot plot” and reinforcing patience in the accompanying press conference.