US Stocks Rise as Investors Await Federal Reserve Rate Decision
US stocks gained on Wednesday with investors looking ahead to the Federal Reserve's monetary policy decision.
The S&P 500 Index rose 0.1% at 9:39 a.m. in New York, with the benchmark heading toward the closing record set on Feb. 19. The tech-heavy Nasdaq 100 Index was up 0.1%.
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The Hill
11 minutes ago
- The Hill
Fed keeps rates steady as Trump ramps up attacks on Powell
The Federal Reserve kept interbank interest rates at a range of 4.25 to 4.5 percent Wednesday amid trade policy fluctuations and pressure from President Trump. Fed officials stressed the overall health of U.S. economic conditions, which has seen decreasing inflation in recent months along with steady levels of low unemployment. The unemployment rate has held at 4.2 percent in its past three readings, with about 7 million people out of work in a labor force of 170 million. Inflation ticked up slightly in May consumer price index (CPI) to a 2.4-percent annual increase from 2.3 percent in April. It declined in its previous three readings from a 3-percent increase in January. The personal consumption expenditures (PCE) price index, which is the Fed's preferred inflation gauge, fell to a 2.1-percent increase in April – nearly at the Fed's target rate of 2 percent. Many economists and businesses have been warning of higher prices due to President Trump's tariffs, which have raised the overall U.S. tariff rate to the highest level in nearly 100 years. So far, however, they have yet to show up conclusively in the price data. End-user import prices were up just 0.2 percent annually in May and have changed little over the past year. Trade services in the producer price index (PPI), which can show the margin effects of tariffs, were up 0.4 percent in May but were down for apparel, which is a heavily imported consumer good. Apparel prices overall decreased in May while margins were unchanged, suggesting those importers were eating the cost, according to former Fed economist Claudia Sahm. 'For now, any extra costs of tariffs (not offset by the lower import prices) appear to be absorbed by businesses,' chief economist Claudia Sahm of New Century Advisers wrote in a Wednesday analysis focused on the apparel sector. 'Those costs could be passed on later via higher consumer prices, but the apparel gross margins are elevated relative to pre-pandemic levels, which could provide some cushion.' President Trump has been calling for the Fed to resume its interest rate cuts, which it started in the back half of last year but has paused since January after inflation ticked up over the fall. Trump went so far as to call Fed Chair Jerome Powell a 'numbskull' recently for maintaining his pause, which will increase interest costs on sky-high U.S. debt levels that are likely to be made worse by GOP tax-and-spending cut legislation now making its way through Congress. However, markets and economists expected the Fed to maintain rates while businesses react to Trump's tariffs. 'Every one of the 95 forecasts in the consensus expects rates to be unchanged,' UBS economist Paul Donovan wrote in a Wednesday commentary. 'U.S. President Trump advocates rate cuts, but this is a distinctly minority view. The trade tax increase is big, and the Fed wants greater certainty about its impact before changing policy.' Businesses can respond to the tariffs in three main ways — by eating the cost of the taxes, raising prices, or lowering overhead. They can also change their supply chains and production schedules in a way that could impact all three. Consumer sentiment has languished in the wake of Trump's trade war. Retail sales took a dive this week, with purchases declining by 0.9 percent in May from April. Also weighing on the Fed's decisionmaking has been the prospect of a major war in the Middle East, following comprehensive strikes by Israel on Iran's nuclear facilities as well as targeted assassinations of Iranian military leaders and scientists. This has led to a spike in oil prices last week, one of the largest single day movements on record. Oil prices were up again Monday yesterday, as Brent crude finished the day at its highest level since February at $76.45 per barrel. 'Oil is still below its 2024 average of $80 so we have to put things in perspective from an inflationary angle but it was trading at $58.20 in early May,' analysts for Deutsche Bank wrote in a Wednesday note to investors. Trump has warned of increasing escalation in the conflict, saying that 'the next week is going to be very big.' Iranian leader Ali Khameini's social media channel posted overnight that 'the battle begins.'
CBS News
11 minutes ago
- CBS News
Federal Reserve holds its benchmark interest rate steady at today's FOMC meeting
What mixed signals on the economy are saying What mixed signals on the economy are saying What mixed signals on the economy are saying The Federal Reserve said Wednesday it is holding its benchmark interest rate steady, marking a continuation of its "wait-and-see" approach as it assesses the impact of the Trump administration's economic policies. By the numbers The central bank on Wednesday said it will maintain the federal funds rate at its current range of 4.25% to 4.5%. The rate has remained at that level since President Trump took office in January. The last time the Fed cut rates was in December 2024, when it trimmed rates by 0.25 percentage points. The federal funds rate reflects the interest rate banks charge each other for short-term loans. A higher benchmark rate can make borrowing more expensive for businesses and consumers because it helps determine what businesses and consumers pay in interest on loans and credit card debt. When the benchmark rate is lowered, loan rates tend to follow, making it less expensive to borrow money. Last month, Fed Chair Jerome Powell said the central bank was monitoring whether the Trump administration's tariffs could spur higher inflation, although he noted that the impact hadn't yet materialized in hard economic data. Mr. Trump has repeatedly called on the Fed to slash rates, including on Wednesday morning before the Fed announced its decision. During remarks to the press, Mr. Trump called out Fed Chair Jerome Powell, saying he's "done a poor job." "We had the highest inflation we ever had and then it came down when I got elected," he said. "Now we have a man who refuses to lower the Fed rate." What does the Fed say about the economy? In determining rate cuts, the Fed's goal is keep inflation low and maintain a healthy job market. In its announcement Wednesday, the central bank mentioned solid labor market conditions and an economy that continues to grow at a steady rate, although it also signaled caution. "Uncertainty about the economic outlook has diminished but remains elevated," the Fed wrote. There has been speculation that Mr. Trump's tariffs could drive up inflation, but so far it has remained in check. The Consumer Price Index rose slightly in May to 2.4%, up from 2.3% in April. The job market also continues to chug along, although some economists forecast that it could start to weaken in coming months.
CNBC
13 minutes ago
- CNBC
Are cybersecurity stocks a new safety trade? What the Israel-Iran conflict shows
The Israel-Iran conflict has put geopolitics squarely on the radar of investors. In tense moments like these, the importance of owning cybersecurity stocks within a diversified portfolio is impossible to ignore. The overall market reaction to the attacks between the longtime regional foes has, admittedly, been fairly subdued since the strikes began late Thursday local time in New York. The S & P 500 had lost just 1% over the past three trading days. That hardly fits the description of a dramatic sell-off, as investors continue to bet that the conflict will not spillover into a broader entanglement that weighs on global growth. And yet, Club cybersecurity holdings CrowdStrike and Palo Alto Networks held up even better than the broader market and a basket of software peers in that stretch. CrowdStrike and Palo Alto Networks both entered Wednesday's session up more than 2% over the past three days. The iShares Expanded Tech-Software Sector ETF, meanwhile, dropped about 0.4%. To be sure, in Wednesday's session, the broader market was higher and our cyber names were giving back some of their recent gains. Earlier Wednesday, President Donald Trump said outside the White House that Iran wanted to negotiate — comments that boosted stocks and sent oil prices lower. The trading action in oil is one way to measure how the market is assessing the geopolitical tensions. CRWD PANW YTD mountain CrowdStrike's stock performance versus Palo Alto Networks so far in 2025. This is not the first time that we've seen cybersecurity stocks hold up better than their tech-industry peers during periods of market disruption. The cohort acted defensively and outperformed the aforementioned software ETF earlier this year when Trump's tariff rhetoric began ramping up. In our minds, the relative stability of cybersecurity stocks amid market turbulence is part of a broader, long-term trend rather than a flash in the pan. The reason is that cybersecurity has become indispensable in today's digital landscape, particularly during geopolitical unrest. Consider the findings of the World Economic Forum's 2025 cybersecurity outlook. "Nearly 60% of organizations state that geopolitical tensions have affected their cybersecurity strategy," according to the report, which was published in January. Additionally, one in three CEOs that responded to the survey said "cyber espionage and loss of sensitive information/intellectual property (IP) theft" is a top concern. And finally, 72% of respondents reported heightened cyber risks, driven partly by the rapid adoption of artificial intelligence, which empowers cybercriminals, with ransomware remaining a persistent threat. This environment signals strong demand for advanced cybersecurity solutions, which CrowdStrike and Palo Alto Networks have. Both companies are capitalizing on mounting security concerns across the corporate and government worlds. That leads investors like us to believe that both Palo Alto and CrowdStrike are well-positioned to deliver long-term value while offering stability amid volatility in the near term. (Jim Cramer's Charitable Trust is long PANW, CRWD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
