Wall Street holds steady as Fed stays put, oil seesaws on Middle East tensions
NEW YORK, June 19 — Wall Street stocks treaded water yesterday after the Federal Reserve met expectations and kept interest rates steady while oil prices nudged higher following a volatile session amid ongoing clashes between Iran and Israel.
The Fed held interest rates unchanged for a fourth consecutive meeting, as Chair Jerome Powell said more time was needed to monitor the inflationary effects of President Donald Trump's tariffs.
Powell maintained the Fed is well-positioned to wait to learn more, before considering changes to interest rates.
'Because the economy is still solid,' the central bank can take time to see what happens, Powell told reporters at a press conference. 'We'll make smarter and better decisions if we just wait a couple of months.'
US indices spent part of the day in positive territory before concluding the session essentially flat.
Earlier in Europe, the London stock market rose but Paris and Frankfurt ended the day down. Asian equities closed mixed as well.
The market's ability to avoid major losses amid the Middle East turmoil is 'extremely bullish,' said Adam Sarhan of 50 Park Investments, while still pointing to trade talk uncertainty as a worry.
The market believes that 'most likely cooler heads will prevail on the trade front and on the Middle East front,' said Sarhan, who described Wednesday's Fed meeting outcome as in line with expectations.
Israel and Iran exchanged fire again, the sixth day of strikes in their most intense confrontation in history.
Oil prices initially rose Wednesday after Iran's supreme leader Ali Khamenei rejected Trump's demand for an 'unconditional surrender,' adding to sharp gains made the previous day.
But oil prices fell later in the day after Trump indicated he was still considering whether the United States would join Israeli strikes and indicated that Iran had reached out to seek negotiations.
At the end of the day, prices ticked up again with both major futures crude contracts finishing higher.
Robert Yawger of Mizuho Americas described the market as 'hypersensitive' to headlines, having shown 'extreme volatility in the last 24 hours.'
The Fed is not the only central bank to meet this week.
On Wednesday, Sweden's central bank cut its key interest rate to try and boost the country's economy, as it cited risks linked to trade tensions and the escalating conflict in the Middle East.
The Bank of England is expected to keep its key rate steady today, especially after official data Wednesday showed UK annual inflation fell less than expected in May.
The Bank of Japan on Tuesday kept interest rates unchanged and said it would taper its purchase of government bonds at a slower pace, as trade uncertainty threatens to weigh on the world's number four economy. — AFP
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