U.S. stocks looked to edge higher on Wednesday as the market pondered the next steps ahead of the Federal Reserve’s interest rate decision and the unfolding Israel-Iran conflict.
The Dow Jones Industrial Average hovered near 42,246, up 30 points at the open, while the benchmark U.S. index S&P 500 held near record highs with a gain of 0.01%. Meanwhile, the Nasdaq Composite was flat, up just 0.01%. All three major indices were slightly in the green but remained constrained as the Middle East conflict weighed heavily on investor confidence.
Israel-Iran war weighs on markets
While stocks looked to hold onto recent gains, markets lacked upside conviction. On Wednesday, Iran’s Supreme Leader Ayatollah Ali Khamenei vowed that the country would not surrender to Israel.
The Iranian leader’s comments came after President Donald Trump posted that Iran had to surrender unconditionally, with speculation rife that the United States is set to join the conflict.
Khamenei warned that U.S. involvement would be “to its own detriment.”
U.S. Treasury yields hovered largely unchanged amid this backdrop, with the benchmark 10-year Treasury note at 4.385% and the 2-year at 3.948%. Oil prices continued to climb following Israel’s surprise attack on Iran, which escalated into further hostilities, with Iran striking Tel Aviv and other locations inside Israel.
Meanwhile, weakness across risk assets has seen cryptocurrencies swing lower, led by Bitcoin(BTC), which gave up gains from above $108,000 to below $105,000.
Investors await Fed’s rate decision
As well as the Middle East conflict, investors will be keen on the Fed‘s policy decision later on Wednesday.
Chair Jerome Powell, under mounting pressure from Trump in recent months to cut rates, is scheduled to speak at 2 p.m. ET. Consensus is that the central bank will hold rates steady, but attention will be on the so-called “dot plot,” which offers insight into whether the Fed’s previously projected two rate cuts are still on the table.
Investors are also digesting the latest data on weekly jobless claims.
Details from the Department of Labor showed weekly claims continue to hover near an 8-month high, with 245,000 initial jobless claims filed in the past week, slightly off the expected 250,000 in the week ending June 7.
