U.S. stock markets closed mixed on Wednesday, with the S&P 500 edging down 0.03%, the Dow Jones falling 0.10%, while the Nasdaq 100 remained unchanged. A late-session sell-off emerged following hawkish remarks from Federal Reserve Chair Jerome Powell. Powell emphasized that inflation risks from tariffs remain elevated and could hinder monetary policy easing, despite the Fed maintaining its benchmark interest rate at 4.25%–4.50% and still projecting two 25-basis-point rate cuts later this year.
In its latest projections, the Fed revised down the U.S. economic growth estimate for 2025 to 1.4% from 1.7% and raised its core inflation estimate to 3.1% from 2.8%. Powell also warned that the planned new tariffs could cause a more prolonged price surge than previously anticipated.
On the geopolitical front, tensions between Israel and Iran continue to capture market attention. Former President Donald Trump claimed that Iran had expressed willingness to negotiate, though the Iranian side quickly denied this. The situation has sparked speculation that the U.S. may intervene directly in the conflict. While there has been no official disruption to the vital Strait of Hormuz—through which roughly 20% of the world’s oil supply passes—navigation activity in the area was temporarily affected by signal interference from Iranian territory.
From the economic data side, weekly U.S. jobless claims fell by 5,000 to 245,000, matching expectations. However, housing data disappointed, with housing starts falling nearly 10% in May to their lowest level in five years. Building permits also dropped by 2%, signaling a potential continued slowdown in the construction sector.
In the bond market, the 10-year U.S. Treasury yield rose slightly to 4.396% after initially climbing on expectations of rate cuts. That sentiment faded as Powell’s remarks underscored persistent inflationary pressures. In Europe, yields on German and UK government bonds declined due to concerns over the economic impact of geopolitical tensions and U.S. trade policies.
Global equity markets were mixed, with the Euro Stoxx 50 down 0.41%, Japan’s Nikkei gaining 0.90%, and China’s Shanghai Composite little changed.
The technology and financial sectors posted notable performances. Shares of Coinbase surged over 16% after announcing a partnership to use the USDC stablecoin in futures trading. In contrast, digital payment giants Mastercard and Visa fell over 5% and 4% respectively, amid concerns about growing competition from stablecoins.
Meanwhile, banking stocks such as Goldman Sachs, Bank of America, and JPMorgan rose on reports that U.S. regulators are considering easing capital rules that limit banks’ holdings of government bonds.