US stocks extended modest gains through mid-Wednesday, with investors staying cautious ahead of the Federal Reserve’s interest rate decision due later in the day. The Dow Jones Industrial Average was up 100 points or 0.24 percent, while the S&P 500 and Nasdaq Composite rose 0.33 percent and 0.51 percent, respectively.
The geopolitical overhang eased slightly after President Donald Trump claimed that Iranian officials had signaled interest in sending a delegation to Washington for negotiations. Oil prices eased after former President Trump said Iran had “reached out”. “They even suggested that they come to the White House. That’s courageous,” Trump said outside the White House, while also continuing his harsh rhetoric online.
Earlier in the day, Iran’s Supreme Leader had reiterated the country “won’t surrender” and warned of “irreparable damage” if the US intervenes in the ongoing Israel-Iran conflict.
Despite the tense backdrop, equity markets are showing resilience, with some investors discounting escalation risks.
The main focus now shifts to the Fed, which is widely expected to hold rates steady in its 2 p.m. ET policy announcement.
JPMorgan economists flagged softer May data — industrial production, retail sales, and auto purchases all fell, in part due to tariff-driven adjustments . Still, markets are betting the Fed will hold rates steady in the 4.25 to 4.50 percent range, choosing a cautious stance amid global uncertainty.
Analysts warn that even if markets cheer the initial announcement, volatility often resurfaces during Powell’s 2:30 p.m. ET press conference—historically a period when gains unwind.
Meanwhile, concerns around tariffs are beginning to show up in the data. JPMorgan noted that May retail sales and industrial production came in weaker than expected and flagged a potential decline in real consumer spending for the month. The tariff bite is also being felt in rising import prices, even if the full pass-through to consumers remains gradual.
In Europe, the Stoxx 600 ended 0.34 percent lower, dragged down by healthcare stocks, as investors braced for a series of central bank decisions on Thursday from the Bank of England, Swiss National Bank, and Norges Bank. Germany’s DAX and France’s CAC 40 slipped around 0.4 percent each, while the UK’s FTSE 100 eked out a 0.1 percent gain. Separately, British lender TSB attracted acquisition interest from both NatWest and Santander, while Sweden’s Bambuser surged after announcing a tie-up with Alibaba Cloud.
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