Wall Street is ending a jittery week with losses in stocks as investors weighed the latest geopolitical and trade developments, chipmakers sank while a $6.5 trillion expiration of options amplified volatility. Treasurys rose as Federal Reserve Governor Christopher Waller said rates could drop as early as July.
Equities extended declines after the Financial Times reported Japan canceled a top-level meeting with the U.S. as the Trump administration told Tokyo to spend more on defense.
Earlier in the session, the S&P 500 had bounced from lows as European officials emerged from negotiations with Iran hopeful that diplomacy will continue in de-escalating the conflict with Israel. Chip shares slid on a Wall Street Journal report the U.S. may revoke waivers for allies with semiconductor plants in China.
Shorter-dated bonds outperformed. Waller reiterated his view that the inflation hit from tariffs is likely to be short-lived. His comments on CNBC followed this week’s Fed decision to keep rates on hold for the fourth straight meeting.
Meantime, Richmond Fed President Thomas Barkin told Reuters there’s no rush to cut rates amid tariff risks to inflation as the job market holds up.
Money markets slightly increased their bets on a September Fed reduction, with an October move remaining fully priced in. Fed officials left interest rates unchanged Wednesday, as they have all year, as they seek to learn more about how President Donald Trump’s policies will affect the economy.
“The market is dealing with a lot presently, from geopolitical tensions, tariff uncertainty and questions about the Federal Reserve’s next move,” said Brian Buetel at UBS Wealth Management. “While there are different risks on the horizon, stocks are a forward-looking barometer of economic growth, which we believe will hold up this year.”
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