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BusinessToday
4 days ago
- Business
- BusinessToday
Oil Prices Surge To Five-Month High As Middle East Fears Mount
Oil prices rallied sharply on Tuesday, with West Texas Intermediate (WTI) crude rising 4.4% to settle at US$74.92 a barrel, hitting its highest level since January amid intensifying fears of a broader conflict in the Middle East. Traders rushed into energy markets following reports that the US could deepen its involvement in Israel's ongoing military strikes on Iran. Former President Donald Trump's public threats and a high-level national security meeting fuelled market speculation of imminent escalation. The geopolitical jitters also pushed up oil market volatility, with a key gauge jumping to a three-year high. Analysts noted that while the Federal Reserve is expected to keep rates steady at its upcoming policy meeting, elevated energy prices could complicate its efforts to maintain a disinflationary path. 'The Fed is walking a tightrope,' said Seema Shah of Principal Asset Management. 'Higher oil prices could become a risk factor if they feed into broader inflation.' Brent crude prices, while not detailed in this session, also saw significant upward movement in tandem with WTI. The crude market's rally comes at a time when economic data from the US is flashing early signs of strain, adding another layer of uncertainty heading into the second half of the year. Bloomberg Related
Time of India
5 days ago
- Business
- Time of India
US stock market today: Dow, S&P 500, Nasdaq drop as weak US spending data and Iran-Israel fears send oil soaring — is a Fed rate cut coming next?
US stock market today: On Tuesday, the S&P 500 dropped 0.3%, trimming its gains for June. The Dow Jones Industrial Average slipped 0.2%, and the Nasdaq 100 fell by 0.4%. This sell-off came as a mix of economic and geopolitical worries sparked risk-off behavior among investors. A string of weak data points from the U.S. economy drove uncertainty. Retail sales fell for the second month in a row, showing that American consumers—who drive over two-thirds of the economy—are becoming cautious. Meanwhile, industrial production also declined, hurt by a slowdown in utilities and manufacturing. In the housing market, builder confidence dropped to its lowest since December 2022, reflecting slowing demand. According to Bret Kenwell from eToro, 'The economy and the consumer are holding up for now, but there are signs of vulnerability. That could present risks in the second half of the year—especially if we see a further slowdown in jobs or spending.' How did the stock market perform today? By midday, all three major indexes were in the red: S&P 500 dipped 0.3% Dow Jones eased 0.2% Nasdaq fell around 0.4%, pressured by weakness in tech and consumer discretionary sectors The selling came as traders digested downbeat macro data and kept a wary eye on geopolitical headlines. Live Events Is the Federal Reserve preparing to cut interest rates soon? With weak economic indicators piling up, market participants are ramping up bets on Federal Reserve rate cuts . The Fed begins its two-day policy meeting in Washington today, and while no changes are expected in June or July, futures markets are now pricing in nearly two quarter-point cuts before the end of the year, with the first one fully expected in October. Seema Shah of Principal Asset Management noted, 'The Federal Reserve is navigating a narrow path. We expect the Fed to wait until the fourth quarter before it reduces policy rates.' Even so, the Fed may use Wednesday's meeting to update its economic and interest rate forecasts, which could signal more clearly what's ahead. President Donald Trump—who has criticized the Fed in the past—could react strongly if policymakers delay cuts, especially as political pressure mounts in an election year. With economic data weakening and inflation showing signs of moderation, traders are increasingly betting the Fed could begin easing: The 10-year Treasury yield slipped to around 4.43% , signaling growing demand for safer assets. Futures markets now price in about 46 basis points of rate cuts by December — suggesting 1 to 2 cuts could be on the table. That said, the Fed is expected to hold rates steady at this week's meeting, but its tone and economic projections will be closely watched. What economic data triggered the sell-off? Investors were hit with disappointing numbers on multiple fronts: May retail sales declined by 0.9% , worse than forecasts for a 0.6% drop — marking the second straight monthly contraction. Factory output showed signs of stagnation, with minimal growth across the manufacturing sector. The data painted a picture of a slowing economy, adding to concerns that the consumer-driven post-pandemic recovery is losing steam. How are Middle East tensions adding to global market anxiety? Beyond the economic slowdown, geopolitical tensions are making investors nervous. Israel and the United States are increasing pressure on Iran, stoking fears of more direct military involvement. Reports suggest that recent Israeli attacks on Iranian nuclear sites may trigger retaliation. President Trump, after cutting short his visit to the G7 summit in Canada, stated that he wants to put a permanent end to Iran's nuclear ambitions, heightening concerns of further conflict. According to Kenny Polcari at SlateStone Wealth, 'Markets will remain mostly on edge until they lower the temperature in the region.' The rising cost of oil due to Middle East risks could also complicate the Fed's fight against inflation, particularly if crude oil prices stay elevated for long. Tensions between Israel and Iran continued to escalate, now entering their fifth day. U.S. crude oil surged by over 2.6% , and Brent crude was up nearly 2.8% , adding to last week's already steep gains of up to 11%. President Donald Trump issued a sharp warning urging Americans to evacuate Tehran , signaling rising risks of direct U.S. involvement in the conflict. That spooked markets further and pushed energy prices higher. What are investors betting on for long-term returns? While US stocks have dominated global markets for years, that may be changing. According to Bank of America's latest fund manager survey, only 23% of respondents expect US equities to be the best-performing asset class over the next five years. In contrast, 54% see international stocks taking the lead. Just 13% are backing gold, and a mere 5% believe bonds will offer the best returns. This is the first time Bank of America asked investors to predict the top-performing asset class over a five-year period. Which sectors are moving the most? Energy stocks were among the few bright spots: Chevron and ExxonMobil edged higher alongside oil prices. Solar and renewable energy names were hammered: Enphase down 23% First Solar dropped 18% Sunrun plummeted 39% , amid growing fears of subsidy cuts under Trump's energy policy shifts. Meanwhile, consumer and tech sectors dragged on the broader indexes, reflecting growing caution over spending and demand. Which corporate headlines are moving markets this week? Several major companies made headlines on Tuesday: Solar energy stocks dropped after Senate Republicans proposed ending clean energy tax credits earlier than expected. xAI, Elon Musk's AI startup, is reportedly raising $4.3 billion in equity after already seeking $5 billion in debt funding. Eli Lilly & Co. agreed to buy Verve Therapeutics for $1.3 billion, strengthening its gene-editing portfolio. Salesforce Inc. announced price increases on multiple software products amid growing AI integration. UnitedHealth Group issued a multi-part bond deal, tapping the US investment-grade bond market. JetBlue plans to cut costs by pausing retrofits and canceling some routes due to soft travel demand. Adobe Inc. launched a Firefly AI mobile app for both Android and iOS, expanding its reach in creative AI tools. Kraft Heinz will remove synthetic dyes like Red 40 and Yellow 5 from all US products by 2027. SoftBank raised $4.8 billion by selling T-Mobile US shares, funding its AI ambitions. Airbus SE secured a 100-jet deal with Vietjet at the Paris Air Show, boosting its aircraft order book. How are global financial markets reacting to all this? Here's a snapshot of Tuesday's major market moves: Stocks: S&P 500: -0.3% Nasdaq 100: -0.4% Dow Jones: -0.2% Stoxx Europe 600: -0.9% MSCI World Index: -0.5% Bloomberg Magnificent 7 Index: -0.6% Russell 2000: -0.3% Currencies: Dollar Index: Little changed Euro: $1.1557 (flat) British Pound: Down 0.3% to $1.3541 Japanese Yen: Down 0.1% to 144.95 per dollar Cryptocurrencies: Bitcoin: Down 3.4% to $105,091.62 Ethereum: Down 4.5% to $2,550.23 Bonds: US 10-year yield: Down 1 basis point to 4.44% Germany's 10-year yield: Flat at 2.53% UK 10-year yield: Up 1 basis point to 4.54% Commodities: West Texas Intermediate crude: Up 2.1% to $73.25 per barrel Spot gold: Little changed What's the outlook moving forward? Market volatility is creeping back in, with the VIX (volatility index) rising over 4% today. Analysts warn that prolonged conflict in the Middle East, coupled with shaky consumer demand, could drive more downside risk. RBC Capital noted the S&P 500 could retreat to the 4,800–5,200 range if inflation re-accelerates and the Fed stays hawkish in response to higher oil prices. Key things to watch this week: Federal Reserve policy decision (announcement and press conference on Wednesday) More May economic data : industrial production, housing starts, and import/export prices Ongoing developments in the Israel-Iran conflict and any U.S. military or diplomatic responses FAQs: Q1. Why did US stocks fall today despite earlier gains? Stocks dropped due to weak US economic data and growing tensions in the Middle East. Q2. Will the Federal Reserve cut interest rates this year? Traders expect rate cuts later in the year, possibly starting by October.
Yahoo
7 days ago
- Business
- Yahoo
Fed on Hold Leaves Wall Street Asking What It Will Take to Cut Interest Rates
(Bloomberg) -- With Federal Reserve officials signaling an extended hold on interest rates, investors and economists will look to Chair Jerome Powell this week for clues on what might eventually prompt the central bank to make a move, and when. Shuttered NY College Has Alumni Fighting Over Its Future As Part of a $45 Billion Push, ICE Prepares for a Vast Expansion of Detention Space Do World's Fairs Still Matter? NYC Renters Brace for Price Hikes After Broker-Fee Ban As American Architects Gather in Boston, Retrofits Are All the Rage A fourth straight meeting without a cut could provoke another tirade from President Donald Trump. But policymakers have been clear: Before they can make a move they need the White House to resolve the big question marks around tariffs, immigration and taxes. Israel's attacks on Iranian nuclear sites have also introduced another element of uncertainty for the global economy. At the same time, the generally healthy, if slowly cooling, US economy has few expecting a rate move any time soon. Investors are betting the central bank won't lower borrowing costs until September at the earliest, according to pricing in futures contracts. 'The safest path to take in that situation, when there is no urgency to cut rates right now, is to just sit on your hands,' said Seema Shah, chief global strategist at Principal Asset Management. Policymakers gather June 17-18. They'll release a statement at 2:00 PM Washington time, and Powell is scheduled to take questions from reporters 30 minutes later. Difficult Choices The president's tariffs are widely expected to raise prices and slow growth, risks that officials flagged in their last post-meeting statement. That could eventually force the Fed to make a difficult choice as the economy pulls them in opposite directions. 'I don't think at this point there's anything to be alarmed about,' said David Hoag, fixed income portfolio manager at Capital Group. 'But the longer we have uncertainty — for the consumer, for companies in terms of planning — the more concerned I'll get about the fundamentals of the economy deteriorating.' So far, however, the economy isn't flashing warning signs that would prompt the Fed to intervene. The unemployment rate has held steady for three months even as job growth has slowed, in part because a sharp decline in immigration is also lowering the supply of workers. The longer the jobless rate remains stable, the longer the Fed can hold rates as a defense against potentially higher inflation. Yet price data has also provided little to worry about. Underlying inflation rose by less than expected in May for the fourth straight month. Treasuries rose last week on the news, bolstered by wagers on more than one rate cut this year. The yield on two-year notes, most sensitive to the Fed's policy, declined by more than seven basis points on the week to 3.96%. Still, officials are likely to wait for additional months of data to understand how much of the tariffs are being passed on to consumers. Israel's airstrikes on Iran will raise additional questions. Fed officials traditionally look through energy price moves, but an oil price shock could affect inflation expectations. Fresh Projections Fresh economic forecasts and rate projections this week could provide helpful guidance to how officials are thinking. They'll be the first since Trump's 'Liberation Day' announcement of sweeping tariffs on April 2. As analysts ponder the results, the range of possibilities is unusually large. If officials predict that unemployment will rise this year meaningfully above the 4.4% they forecast in March, that would suggest policymakers may cut rates before the fourth quarter, said Shah. Some Fed officials, including Governor Christopher Waller, have already signaled an openness to cutting because they believe policymakers can view the expected impact of tariffs on consumer prices as temporary — as long as inflation expectations remain anchored. That aligns with market-based measures suggesting traders also believe the tariff price bump will be short-lived. But should officials raise their expectations for inflation, that could reduce the number of cuts they project this year to one, from the two seen in March, said Matthew Luzzetti, chief US economist for Deutsche Bank. Strategists at Barclays warned of just such a 'hawkish' surprise in a note to clients. Officials might also consider the substantial uncertainty over the final state of Trump's policies and simply leave their projections unchanged. 'I'd be surprised if the dots move much,' said Zachary Griffiths head of investment-grade and macroeconomic strategy at CreditSights. 'It's been a roller-coaster ride' since the Fed last released projections in March. 'On net, I think we're probably in a somewhat similar situation,' he said. Late Support Some economists say the timing of the Fed's next moves will eventually come down to how long it takes for Trump's policies to show up in the economic data — and how strongly that raises concerns about a downturn. In a Bloomberg survey of economists conducted June 6-11, 42% of respondents predicted the Fed will hold rates steady until there's more concrete weakness in the economy. Julia Coronado, founder of the research firm MacroPolicy Perspectives and a former Fed economist, said she expects rate cuts beginning in October or December in response to the more notable labor-market slowdown she estimates will materialize by then. --With assistance from Amara Omeokwe. American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software New Grads Join Worst Entry-Level Job Market in Years As Companies Abandon Climate Pledges, Is There a Silver Lining? US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom ©2025 Bloomberg L.P.
Bloomberg
10-06-2025
- Business
- Bloomberg
Uncertainty May Lead to 'Pothole' for Stocks: Seema Shah
"This is a tough environment for investors," Seema Shah, Principal Asset Management chief global strategist, says. Speaking on "Bloomberg Open Interest," Shah also says the Federal Reserve won't cut rates until at least the fourth quarter. (Source: Bloomberg)
Bloomberg
29-05-2025
- Business
- Bloomberg
Positive Returns Possible, But Volatile: Shah
Seema Shah, chief global strategist at Principal Asset Management, discusses the market reaction after a US court blocked the bulk of President Donald Trump's import tariffs. "I don't think this is the end of the tariff story," she tells Bloomberg Television. Shah says she expects "an economic slowdown" but not a recession. "You can still get positive returns this year. It's just going to be something which is fairly volatile, very erratic, but it will be an upward-sloping move in the end." (Source: Bloomberg)
