Schwab Market Update
With Eyes on the Middle East, Investors Await Fed
Published as of: June 18, 2025, 9:10 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® index | 5,982.72 | -50.39 | -0.84% |
| Dow Jones Industrial Average® | 42,215.80 | -299.29 | -0.70% |
| Nasdaq Composite® | 19,521.09 | -180.12 | -0.91% |
| 10-year Treasury yield | 4.38% | -0.01 | -- |
| U.S. Dollar Index | 98.61 | -0.21 | -0.21% |
| Cboe Volatility Index® | 21.29 | -0.31 | -1.44% |
| WTI Crude Oil | $75.31 | +0.47 | +0.63% |
| Bitcoin | $104,680 | -$230.00 | -0.22% |
Disclosure
Major index values are as of Tuesday's close; others are as of 8:51 a.m. ET.
(Note to readers: U.S. markets are closed Thursday, June 19, in observance of the Juneteenth holiday. The Schwab Market Update will return on Friday, June 20).
(Wednesday market open) Stocks edged up in featureless early trading ahead of the Federal Reserve's rate decision. Investors also await moves on the Middle East chess board after President Trump's veiled threats yesterday helped spook the market and Iran's leader responded this morning that the country won't surrender. Unless new developments take place there, focus today likely will remain on the Fed and keep trading muted until the 2 p.m. ET decision, though no rate change is expected.
One question is whether the Fed—which baked in two rate cuts this year when it last issued projections in March—sticks with that or dials back. Treasuries are worth watching for their reaction to the updated Fed Summary of Economic Projections outlining the central bank's thinking on inflation, economic growth, and the possible rate path. Fed Chairman Jerome Powell's press conference after the meeting might shed more light on the projections and has been known to move markets. Policy makers find themselves in a tricky spot as the economy appears to be slowing while the central bank wrestles with concerns of tariff-driven inflation and a proposed U.S. budget that would raise deficits.
Crude oil (/CL) rose again after a 5% rally Tuesday. Oil's climb gave energy stocks a boost yesterday, but that was the only sector to rise as investors stepped back from riskier positions and appeared to seek perceived safety in Treasuries, a trend that continued early today. The S&P 500 index fell about 0.8% Tuesday but didn't take out last Friday's intraday lows, perhaps a sign of continued resilience. Meanwhile, another batch of relatively soft data scurried in this morning just before the Fed decision. Initial jobless claims slipped to 245,000 while housing starts and building permits fell. "Initial and continuing jobless claims both declined modestly but remain elevated," said Kathy Jones, chief fixed income strategist at Schwab.
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Three things to watch
- Rate cut projections under scrutiny: Looking past today's Fed meeting, there's a 15% chance of a July rate cut, and a 63% chance of one in September, according to the CME FedWatch Tool, but those could change depending on what today's rate path projections indicate. Keep in mind that all it would take for the Fed to work in odds of just one rate cut by year-end versus its current projection of two would be for two officials to downwardly revise their projections in the so-called "dot plot" of rates. However, the dot plot isn't meant as a forecast. It's a living, changing document that asks policy makers where they individually believe rates might go, and investors sometimes focus too much on the average projection. Investors may also zero in on the Fed's updated inflation and economic growth projections after new evidence of services sector weakness surfaced in yesterday's retail sales report. In March, the Fed's median projection for U.S. 2025 gross domestic product (GDP) growth fell to 1.7% from 2.1%. Its 2025 core inflation estimate—which extracts volatile food and energy—climbed to 2.8% from 2.5%. Have a cheat sheet nearby when the new projections debut.
- Valuation watch before earnings heat up next week: The S&P 500's current forward price-to-earnings (P/E) ratio is back near 22, historically high. That means the coming earnings season could grow in importance. First quarter earnings surprised to the upside, but analysts expect much slower second quarter earnings growth. A host of positive surprises from major companies might be what's needed to give stocks more support, considering current pricing. This is among the quietest weeks of the quarter for earnings, with no major ones on the calendar today and markets closed for the holiday tomorrow. A few return on Friday, including Accenture (ACN) and Kroger (KR). Next week is more crowded, with potential market-moving names like Nike (NKE), Micron (MU), and FedEx (FDX)—a trio that could give investors insights into retail demand, the trade war, and semiconductor trends. Earnings season begins in earnest in mid-July with the big banks. The latest FactSet projection for second quarter S&P 500 earnings growth is 4.9%, down from 13.3% in the first quarter. This would be the lowest growth since the fourth quarter of 2023.
- Holiday, weekend limit trading opportunities: Those who want to trade the Fed decision and the latest geopolitical news may find limited chances with markets closed tomorrow in observation of Juneteenth. They re-open Friday, but that's also "triple witching" day when stock index futures, stock index options, and stock options expire. Traditionally, volatility sometimes climbs on such days, and likely would be elevated anyway with investors back for one day before the weekend to react to both the Fed projections and war developments. Until Tuesday's war-related stumble, the market seemed to be tilting toward another test of the 6,100 level for the S&P 500 index. The underlying rally back toward all-time highs could reflect fund managers jumping back into the market as the rally gains steam and the end of the quarter approaches. So-called "window dressing" is when fund managers stock up on the quarter's winning stocks before the quarter ends.
On the move
- Marvell Technology (MRVL) rose 3.3% in the early going after the semiconductor firm made positive comments about its outlook at an AI investor event.
- Nucor (NUE) added 2.7% ahead of the open after the steel company issued fiscal second quarter earnings projections that topped Wall Street's consensus.
- Reddit (RDDT) slipped 0.5% early Wednesday after rising sharply yesterday on news it was releasing new AI-powered ad tools called "Community Intelligence."
- Humana (HUM) was flat in pre-market trading after gaining Tuesday on news that the Senate budget bill kept out cuts to Medicare Advantage, an important part of the company's insurance offerings.
- Intel (INTC) rose 0.3% after The Oregonian reported the semiconductor firm plans to lay off 15% to 20% of its Intel Foundry division workers.
- Analog Devices (ADI) added 1.2% after Cantor Fitzgerald upgraded shares to Overweight from Neutral.
- Bitcoin (/BTC) slipped amid geopolitical uncertainty despite the U.S. Senate approving legislation to establish rules for stablecoins. The bill still must be approved in the U.S. House. Shares of Circle Internet Group (CRCL) climbed 3.2% on the news in pre-market trading.
- The Atlanta Fed GDPNow estimate for second quarter gross domestic product (GDP) growth was downwardly adjusted to 3.5% from the previous 3.8%. There's another update scheduled today.
- U.S. May housing starts of 1.256 million on a seasonally adjusted annual basis and building permits of 1.393 million compared with consensus of 1.36 million and 1.41 million, respectively. Both were down from April, with housing starts particularly light.
More insights from Schwab
Bankrupt companies and their shares: If you bought stock in a company and it goes bankrupt, what does that mean for your investment? The latest Schwab video walks you through the corporate bankruptcy process and how it can affect your shares. It also helps you learn ways to avoid such companies when you make investments.
Chart of the day
Data source: ICE, CME Group. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
Gold futures (/GC—candlesticks) sometimes compete with the U.S. dollar ($DXY—blue line) for investor funds in times of geopolitical tension. But it's been no real contest this year with the dollar down 9.75% versus a more than 27% rise for gold. The dollar has been weighed on by growing concerns of U.S. deficits, signs of a slowing U.S. economy, and tariff-driven inflation fears. The prospect of Fed rate cuts is another source of dollar pressure, but the weak greenback may be a tailwind for U.S. companies soon to report second quarter earnings.
The week ahead
Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.
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).
June 23: May existing home sales and expected earnings from KB Home (KBH).
June 24: June Consumer Confidence and expected earnings from FedEx (FDX).
June 25: May new home sales and expected earnings from Micron (MU).
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