Daily Market Report June 20th, 2025
The highly anticipated, but no surprise at the results, finished with the market selling off from its best earlier levels and ending narrowly mixed. The Federal Reserve eventually said that it may cut interest rates twice this year, though it is far from certain about that.
The Dow gave up a gain of 190 points at 2:45pm to end lower by 44 to 42,171 led by selling in BA, AMZN, MCD and surprisingly V from all-time highs. The S&P ended 2 points lower to 5981 after being higher by 28 at the same time due to some weakness in a few tech stocks.
The Nasdaq was able to squeak out a small gain of 25 to 19, 546 after some tech stocks did better such as COIN, MRVL, MSFT, TSLA and ORCL. The Russell 2000 Index of small stocks also eked out a gain of 11 to 2113 on strength in banks while the VIX fell back to 20.14.
Treasury yields also wavered but ultimately held relatively steady after the Fed released a set of projections showing the median official expects to cut the federal funds rate twice by the end of 2025. That is the same number they were projecting three months ago, and it helped calm worries a bit that inflation caused by the President could tie the Fed’s hands. The latter referred to the Fed Chair as a “stupid person” because of his refusal to follow Trump’s suggestion of a 2 ½ rate cut immediately because of his concern that inflation is going to stay low, something that might not take place because of the potential effect of tariffs.
So far, inflation has remained relatively tame, and it is near the Fed’s target of 2%. But economists have been warning it may take months to feel the effects of tariffs. And inflation has been feeling upward pressure recently from a spurt in oil prices because of the Israel and Iran recent war.
Fed Chair Jerome Powell stressed on Wednesday that all the uncertainty surrounding tariffs means the median forecast for two cuts to interest rates this year could end up being far from reality. “Right now it’s just a forecast in a very foggy time,” he said
Fed officials are waiting to see how big Trump’s tariffs will ultimately be, what they will affect and whether they will drive a one-time increase to inflation or something more dangerous. There is also still deep uncertainty about how much tariffs will grind down on the economy’s growth.
“Because the economy is still solid, we can take the time to actually see what’s going to happen,” Powell said.
“We’ll make smarter and better decisions if we just wait a couple months or however long it takes to get a sense of really what is going to be the passthrough of inflation and what are going to be the effects on spending and hiring and all those things.”
Adding to the uncertainty were continued swings for oil prices. After topping $74 during the morning, the price for a barrel of benchmark U.S. oil dropped below $72 before settling at $75.14, up 0.4% from the day before. Brent crude, the international standard, rose 0.3% to $76.70.
Oil prices have been jumping around for days because of concerns that the conflict between Israel and Iran could disrupt the global flow of crude. Not only is Iran a major producer of oil, it also sits on the narrow Strait of Hormuz, through which much of the world’s crude passes.
Trump said on Wednesday that Iran has reached out to him and that it’s not “too late” for Iran to give up its nuclear program, though he also refused to say whether the U.S. military would strike the country.
“I may do it. I may not do it,” he said. “I mean, nobody knows what I’m going to do.”
On Wall Street, NUE rose after the steelmaker said it expects to report growth in profit for all three of its operating groups in the second quarter. It said it benefited from higher selling prices at its sheet and plate mills, among other things.
The yield on the 10-year Treasury edged down to 4.38% from 4.39% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do with its overnight interest rate, held at 3.94%.
The moves followed a mixed set of reports on the U.S. economy released earlier in the day. One said that 245,000 workers applied for unemployment benefits last week, which could be an indication of fewer layoffs. But a second report said that homebuilders broke ground on fewer homes last month than economists expected. That could be a sign that higher mortgage rates are hurting the industry, down by 9.8%.
Earnings this week include: today – KMX higher; ACN lower.
Economic reports will include: today - May L. E.I.
By Don Selkin