Markets gain as investors await rate outlook and geopolitical clarity
U.S. stocks rose modestly on Wednesday as traders positioned themselves ahead of the Federal Reserve’s upcoming rate decision and reacted to fresh signals of diplomatic movement between the U.S. and Iran. The Dow Jones Industrial Average gained 118 points (0.3%), while the S&P 500 and Nasdaq Composite advanced 0.4% and 0.5%, respectively.
All eyes are on the Fed’s policy announcement at 2 p.m. ET, where the central bank is widely expected to keep interest rates unchanged. However, markets are closely watching Fed Chair Jerome Powell’s remarks and the release of the updated “dot plot,” which reflects members’ projections for future rate paths.
Middle East tensions show signs of easing
Markets also responded to comments from President Donald Trump, who said Wednesday that Iran signaled willingness to negotiate. Speaking outside the White House, Trump stated, “They even suggested that they come to the White House. That’s courageous.”
The news pushed oil prices lower and gave equities a lift. Traders had grown increasingly anxious earlier this week as military tensions between Israel and Iran escalated. On Wednesday, Iranian Supreme Leader Ayatollah Ali Khamenei warned the U.S. against intervening, saying it would face “irreparable damage.”
Trump’s Tuesday social media post demanding “UNCONDITIONAL SURRENDER!” from Iran added to the uncertainty. He also warned that the U.S. knows the Iranian leader’s location but would not strike “for now.”
Markets appear resilient despite global risks
Despite the volatility, investors appear to be maintaining confidence. “The market just seems very keen to fade geopolitical risk,” said Zachary Hill, head of portfolio management at Horizon Investments. “That has been historically the right thing to do, so I think that’s kind of what’s driving us so far today.”
Geopolitical tensions are colliding with shifting monetary policy expectations. Recent inflation data and soft retail figures have complicated the outlook for the Fed, which is trying to assess whether it can still cut rates later this year without fueling inflation.
