By Stephen Culp, Kanchana Chakravarty and Nikhil Sharma in Bengaluru
BENGALURU, June 26 (Reuters)
Financial markets are, in the normal sense of the word, are quite volatile. Events in the Middle East are just one of those that have also left a mark on financial matters. Other influencing factors include your natural disasters, political disasters and economic shifts, to name a few.
A snippet view of the walk on Wall Street
U.S. stocks took a breather on Wednesday, pausing a two-day rally as the tenuous Israel-Iran cease fire continued to hold and investors pored over a second day of congressional testimony from Federal Reserve Chair Jerome Powell. Tech shares lifted the Nasdaq, while the S&P 500 ended flat. The benchmark index remained within striking distance of its record closing high reached on February 19. Nvidia shares (NVDA.O), touched a record high, lifting its market value to $3.75 trillion and making it the world’s most valuable company.
Nvidia is a leader in the American technology environment, known for their GPUs (graphics processing units) as well as innovation in computing and AI (artificial intelligence). Among the 11 major sectors of the S&P 500, technology, communication services (.SPLRCL), and healthcare (.SPXHC), advanced on the day. Defensives such as real estate (.SPLRCR), consumer staples (.SPLRCS), and utilities (.SPLRCU), underperformed the broader market.
The Dow Jones Industrial Average (.DJI), fell 106.59 points, or 0.25%, to 42,982.43, the S&P 500 (.SPX), lost 0.02 points, or 0.00%, to 6,092.16 and the Nasdaq Composite (.IXIC), gained 61.02 points, or 0.31%, to 19,973.55. The fragile truce between Israel and Iran continued to hold, with U.S. President Donald Trump declaring victory despite a lack of clarity regarding the extent of the damage U.S. strikes had on Iran’s uranium enrichment assets.
A fine cut on a tension-laden situation
Fed Chair Jerome Powell, in his second straight day of congressional testimony, reiterated to the Senate Banking Committee that the central bank is well-positioned to wait to cut interest rates until the inflationary effects of Trump’s wide-ranging tariffs are better known. Jerome Powell has been serving as the 16th chair of the Federal Reserve since 2018. He has been preceded in the office by Janet Yellen.
Financial markets are pricing in almost a 25% likelihood of a rate cut at the July policy meeting, and a 67% probability that the first cut will arrive in September, according to CME’s FedWatch tool. Tesla (TSLA.O), shares fell 3.8% as its European sales slumped for the fifth month. FedEx shares (FDX.N), slid 3.3% after the package delivery company forecast quarterly profit below estimates as tariffs weighed on global demand. Rival UPS (UPS.N), dropped 1.2%.
A blueprint of the Middle East on the financial market
General Mills (GIS.N), also provided disappointing profit guidance, sending its shares 5.1% lower. U.S.-listed shares of cybersecurity firm BlackBerry jumped 12.5% on the heels of its revenue forecast hike, attributed to steady demand. Micron Technology (MU.O), surged more than 5% in extended trading after forecasting better-than-expected fourth-quarter revenue. Declining issues outnumbered advancers by a 1.94-to-1 ratio on the NYSE. There were 174 new highs and 69 new lows on the NYSE.
On the Nasdaq, 1,566 stocks rose and 2,859 fell as declining issues outnumbered advancers by a 1.83-to-1 ratio. The S&P 500 posted 24 new 52-week highs and 7 new lows while the Nasdaq Composite recorded 86 new highs and 65 new lows. Volume on U.S. exchanges was 16.02 billion shares, compared with the 18.08 billion averages for the full session over the last 20 trading days.
The future of the world remains, at the best of times, uncertain. If tensions within the Middle East persist for an extended period of time, it can lead to volatility within the energy markets. It can also accelerate de-dollarization trends whilst also possibly disrupt global supply chains. On the flip side, worldwide markets have also started showing quite resilient behavior towards geopolitical events.