Daily Market Brief: Fed Decision in Focus as Oil Drops and Tech Stocks Pull Back

Index Update

US equities ended mixed on Tuesday as profit-taking in AI and semiconductor stocks weighed on the S&P 500 and Nasdaq, while the Dow hit a new high on optimism over the preliminary US-Iran agreement and easing oil-driven inflation concerns. Nvidia, Broadcom, Micron, AMD, and Intel declined, while SpaceX, JPMorgan, and Visa supported broader market sentiment.

Market Movers

Among the top-performing stocks of the session SL Science Holding Limited surged 166.97%, while CervoMed Inc. rallied 82.26%. On the losing side, Sadot Group Inc. fell 63.06%, while Veraxa Biotech AG. declined 55.50%, making them the weakest performers during the trading day.

Commodities Update

Crude oil and Brent prices fell to their lowest levels since early March as expectations of a US-Iran interim deal raised prospects of renewed Iranian exports, easing Strait of Hormuz shipping restrictions, and the release of over 100 oil-laden vessels in the Gulf. The sharp decline has reduced geopolitical risk and inflation concerns, though falling US crude inventories and an 8.3 million-barrel weekly draw indicate near-term supply tightness remains.

Gold and silver advanced this week as investors awaited a US-Iran interim peace agreement expected to restore Persian Gulf oil flows, ease inflation pressures, and support a more stable interest-rate outlook. Gold traded above USD 4,300/oz while silver held near USD 70/oz, with markets also focused on the Federal Reserve’s upcoming policy decision, where rates are expected to remain unchanged.

Macro Updates

Dollar Index Holds Steady Ahead of Fed Decision

The dollar index remained near 99.6 on Wednesday as investors awaited the FOMC policy decision, with the Fed widely expected to keep rates unchanged while markets focus on forward guidance and updated economic projections. Rate hike expectations eased slightly after reports of a US-Iran interim peace deal triggered a drop in oil prices and reduced inflation concerns, while global policy attention also remained on the BoJ’s recent rate hike and the BoE’s upcoming decision.

Fed Expected to Hold Rates Amid Inflation Uncertainty

The Federal Reserve is expected to keep rates unchanged at 3.50%–3.75% for a fourth straight meeting in June 2026, as policymakers balance persistent inflation, firm labour market conditions, and still-elevated oil prices despite the provisional US-Iran peace deal. Investors will closely monitor the updated economic projections and dot plot for guidance on the rate outlook under new Fed Chair Kevin Warsh.

US Crude Inventories Extend Sharp Drawdown

US crude inventories fell by 8.33 million barrels for the week ended June 12, marking another larger-than-expected draw and extending a nine-week decline of around 52 million barrels. Cushing stocks and SPR reserves also dropped, while US crude production rose to 13.80 million bpd; gasoline inventories increased, and distillate stocks edged lower.

Bonds Commentary

The US 10-year Treasury yield held steady near 4.43% as investors avoided major positions ahead of the FOMC decision. While the Fed is expected to keep rates unchanged, markets remain focused on policy guidance, economic projections, and evolving rate hike expectations, which eased slightly after a US-Iran peace deal report lowered oil prices and inflation concerns.

Futures Update

US stock futures steadied on Wednesday as investors awaited the Federal Reserve’s policy decision, with rates expected to remain unchanged. Markets also focused on upcoming retail sales, pending home sales data, and earnings from CarMax and Jabil, while Tuesday’s session showed weakness in semiconductor stocks and continued gains in SpaceX.

The S&P 500 slipped 0.57% on Tuesday, closing at 7,511.34 after failing to hold early gains that pushed the index to an intraday high of 7,564.96. Despite the pullback, the broader trend remains bullish, with the index still trading comfortably above its 21-day EMA (7,439.40) and 50-day EMA (7,293.66) following a strong rally from the April lows. Average volume and the absence of heavy selling pressure suggest the decline was primarily profit-taking rather than a trend reversal, while the 21-day EMA remains a key support level to watch in the near term.