empty
19.06.2025 09:08 AM
The Market Keeps Its Options Open

While the White House and the Federal Reserve are in wait-and-see mode, the market has also decided to hold steady. Donald Trump has yet to make a final decision on whether the U.S. should intervene in the Israel-Iran conflict. Meanwhile, the Fed wants more data on the economic impact of tariffs before making any definitive rate decisions. The stagflation scenario outlined by the central bank clearly unsettled the S&P 500. The broad stock index has retreated—but calling it a "sell-off" would be an overstatement.

The Fed lowered its 2025 GDP growth forecast from 1.7% (March) to 1.4%. In 2024, the economy expanded by 2.4%. At the same time, it raised its projections for inflation, from 2.7% to 3%, and for unemployment, from 4.4% to 4.5%. The central bank does not know how tariffs will ultimately impact the economy and prefers to leave its options open. It will act accordingly depending on which side of the Fed's dual mandate becomes more concerning—rising inflation or deteriorating labor conditions. If inflation surges, rates will remain unchanged; a new monetary easing cycle could begin if unemployment rises.

FOMC Rate Projections

This image is no longer relevant

Although the median FOMC projection for the federal funds rate remained unchanged, seven committee members now see no rate cuts in 2025—up from four in March. Keeping borrowing costs high at 4.5% is negative for the economy and the stock market. Unsurprisingly, the U.S. President did not take the Fed's June verdict lightly.

Trump called for an immediate rate cut of 1 to 2.5 percentage points and labeled Jerome Powell a fool. He emphasized that he had already collected $88 billion in tariffs, with no rise in inflation. So why should the Fed maintain a pause? The Republican candidate is confident he could do a better job than the current Fed Chair. Sarcastically, he even asked whether he could appoint himself to the position.

Trading Volume Dynamics for U.S. Equities

This image is no longer relevant

It's evident that Trump is unhappy with the decline of the S&P 500. During his first presidential term, the stock market was seen as a barometer of his administration's effectiveness. There's little reason to think this perspective has changed. The market continues to react sharply to Trump's comments, which can trigger significant volatility—especially during the typically quiet summer season.

This image is no longer relevant

Ironically, U.S. involvement in the Middle East conflict could support the S&P 500. In such a scenario, the likelihood of Iran capitulating would rise, reducing the chance of Tehran blocking the Strait of Hormuz. A drop in oil prices would lessen inflationary pressures in the U.S. and might push the Fed toward monetary easing—a positive development for equities.

Technical Outlook for S&P 500

On the daily chart, recent attempts by the bulls to mount a counterattack have failed. This highlights weakness on the buy side and opens the door to short positions targeting the fair value around 5900 and the key pivot level at 5800.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis, Forecast, and Current Market Situation

Intraday demand for the Japanese yen remains steady, accompanied by broad-based U.S. dollar weakness, contributing to the decline in the USD/JPY pair. Rising expectations that the Bank of Japan

Irina Yanina 12:55 2025-06-26 UTC+2

XAU/USD. Analysis and Forecast

Gold prices are showing moderate gains for the second consecutive day, though they remain below the 3,350-dollar level. Intraday demand for the Japanese yen persists alongside broad U.S. dollar weakness

Irina Yanina 12:34 2025-06-26 UTC+2

USD/CHF. Analysis and Forecast

The USD/CHF pair has remained under pressure for the fourth consecutive day, falling back to levels last seen in 2011. Bearish sentiment toward the U.S. dollar persists amid concerns over

Irina Yanina 12:04 2025-06-26 UTC+2

Trump Again Criticizes the Fed for Being Too Slow

On Wednesday, the U.S. dollar sharply declined against major currencies after President Donald Trump stated that he has three or four candidates in mind to replace Federal Reserve Chair Jerome

Jakub Novak 10:59 2025-06-26 UTC+2

Investors Recall the Chronic Weakness of the Dollar (Further Decline in #USDX and USD/JPY Possible)

The markets continue to be dominated by the theme of Iran-Israel negotiations, previously initiated by the United States. Whether actual agreements are reached or not will have a noticeable impact

Pati Gani 09:19 2025-06-26 UTC+2

The Market Has Found a Cure for All Troubles

It seems that the heavens are aligned with Donald Trump's desires. The U.S. President's successes in the Middle East have led to a new perspective on the policies pursued

Marek Petkovich 09:04 2025-06-26 UTC+2

What to Pay Attention to on June 26? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Thursday, and the market this week has shown a clear intention to continue the upward trend that has lasted for five months. Yesterday

Paolo Greco 07:16 2025-06-26 UTC+2

GBP/USD Overview – June 26: July 9 Is Approaching

The GBP/USD currency pair remained stagnant for most of Wednesday. Let's recall an old technical signal: if the price updates a significant extreme and immediately pulls back, there

Paolo Greco 03:39 2025-06-26 UTC+2

EUR/USD Overview – June 26: Jerome Powell Said Nothing New

The EUR/USD currency pair remained completely calm throughout Wednesday. Let's recall that this week began with a storm, provoked—of course—by Donald Trump, who first announced a ceasefire between Iran

Paolo Greco 03:39 2025-06-26 UTC+2

The Euro Regains the Initiative

The euro is attempting to resume its upward movement, although not many economic reasons support this scenario. Inflation in May rose in line with the ECB's expectations, which only strengthened

Kuvat Raharjo 00:43 2025-06-26 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.