Stocks Waver as Fed Holds Rates and Iran War Clouds Outlook – US Market Wrap

Wall Street saw stocks fluctuate and bonds decline after a divided Federal Reserve kept rates unchanged and warned that the war in Iran is adding significant uncertainty to the economic outlook. Brent crude climbed to its highest level since 2022.

With no clear end to the Middle East conflict, traders largely abandoned expectations for a rate cut this year and began pricing in the possibility of a hike in 2027. The 10-year Treasury yield rose to a one-month high, while most S&P 500 stocks declined. In late trading, Meta slipped after lifting its spending outlook, while Alphabet gained after sales topped expectations.

Fed officials adjusted their statement to highlight that developments in the Middle East are contributing to elevated uncertainty around the economy, while keeping language about the timing and scale of any future rate changes.

The meeting also exposed deeper divisions inside the central bank. Several officials supported holding rates steady but resisted maintaining an easing bias, while Governor Stephen Miran dissented in favor of a cut.

Jerome Powell’s press conference marked his final one as Fed chair after the Justice Department dropped its investigation into the central bank, clearing the path for Kevin Warsh’s Senate confirmation. Powell said he will remain at the Fed as a governor.