S&P 500 Bulls Disappointed by Fed as Wait for Rate Cuts Continues

It was a disappointing week for the S&P 500 (Index: SPX). The index dropped just 0.15% from its previous week’s close to exit the trading week ending on Friday, 20 June 2025 at 5,967.84.

Keeping in mind that the weekend’s market-moving geopolitical events had not yet transpired, what made the week that was disappointing for Wall Street bulls was the continuing lack of action to cut interest rates by the U.S. Federal Reserve. That was of little surprise since Fed officials had well telegraphed their intention to continue holding the Federal Funds Rate steady in preceding weeks. Their inaction now stands out in contrast to other central banks that have either been actively cutting their regional interest rates for months or have begun reacting to geopolitical tensions by cutting their interest rates in the last week.

But for bulls anxious to see a reduction in U.S. interest rates, there was some positive news. After the Fed held the Federal Funds Rate (FFR) steady at a target rate of 4.25-4.50%, the CME Group’s FedWatch Tool projects the Fed will continue holding the FFR at that level until its 17 September (2025-Q3) meeting, when it is expected to cut the rate by a quarter percent. Afterward, the FedWatch Tool anticipates the Fed will keep cutting the FFR a quarter point at a time at 12-week intervals into mid-2026.

The latest update of the alternative futures chart reveals the index is tracking along with the bottom of the expected range associated with investors focusing their forward-looking attention on the distant future quarter of 2025-Q4.

Here are the Juneteenth holiday-shortened week’s market-moving headlines, which we’ll note again do not include the surprising U.S. military attacks against Iran’s heavily armored uranium refining and nuclear development facilities. Investor reaction to that geopolitical event will arrive on Monday, 23 June 2025.

Monday, 16 June 2025

• Signs and portents for the U.S. economy:

• Oil slips as Israel-Iran strikes spare key energy infrastructure
• Nearly 1 million illegal immigrants have ‘self-deported’ under Trump, which has led to higher wages
• Signs of a Weaker Labor Market

Fed minions wondering why their prediction for inflation from tariffs isn’t panning out:

• Where is the tariff inflation, anyway?

Mixed economic signs developing in China:

• China’s factories slow, consumers unexpectedly perk up

BOJ minions looking at ways to stimulate Japan’s economy:

• BOJ to consider slower bond taper as fresh global risks emerge

ECB minions “relaxed”, Eurozone minions want to get US trade deal:

• ECB relaxed about euro strength, risk of too low inflation, de Guindos says
• EU prepared to accept flat 10% US tariff with conditions, Handelsblatt reports

• Not the time to mess with EU-US trade, EU’s Costa says

Nasdaq, S&P, Dow closed higher as Middle East tensions continue and Fed rate decision looms

• Equities end higher as oil prices pull back on truce hopes

Tuesday, 17 June 2025

• Signs and portents for the U.S. economy:

• Oil prices rise more than 4% as Iran-Israel conflict escalates
• Weak US retail sales, manufacturing output point to softening economy

Fed minions meet, thinking about stimulus for U.S. economy:

• Fed policymakers meet as new data raises growth concerns, geopolitical risks rise
• Fed announces meeting to discuss easing bank leverage rules

BOJ minions implementing ways to stimulate Japan’s economy, say they are still thinking about hiking rates:

• BOJ to slow pace of bond tapering next year as fresh risks emerge

• Explainer: Why is the BOJ slowing its buying of Japanese government bonds?

BOJ’s inflation warning leaves room for another rate hike this year

Wall Street ended lower as Israel-Iran conflict escalates and Fed rate announcement looms

• Indexes end lower as Israel-Iran fighting raises investor anxiety

• Solar stocks plunge on Senate proposal to phase out tax credits by 2028

Wednesday, 18 June 2025

• Signs and portents for the U.S. economy:

• US weekly jobless claims, housing data point to softening economic activity
• US single-family housing starts rise in May; permits slump
• US added over 1,000 new millionaires a day last year, UBS report says
• Oil settles higher as Iran-Israel conflict enters sixth day
• US rate futures bolster September, October rate cut chances after Fed decision

Fed minions choose to not cut U.S. interest rates, as expected; cling bitterly to belief tariffs will cause inflation:

• Fed keeps rates steady; Powell sees ‘meaningful’ inflation ahead
• Fed’s Powell says central bank still has the needed data to do its work

• Fed’s Powell says he expects to see more tariff-driven price hikes in coming months
• Trump knocks Fed’s Powell, muses about appointing himself to lead central bank

Fed officials see two rate cuts in 2025, but overall turn hawkish

Bigger trouble, stimulus developing in China:

• China Auto Industry On Verge Of Collapse As Six Major Cities Run Out Of Car-Buying Subsidies
• China will issue remaining consumer goods subsidies at stable rate, state media says

BOJ minions get gloomy over Japan’s economic outlook and impact on their rate hike plans; Japan’s government minions stop trying to flood market with long-term debt:

• BOJ’s gloomy projections suggest no rate hike this year, ex-top economist says

• Japan’s exports post first drop in 8 months as US tariffs hit auto firms

Exclusive: Japan to cut super-long bond sales by 10% to calm markets, draft shows

Wall Street ends flat after Fed continues to stick to wait-and-see mode

• S&P 500 ends nearly flat, gives back gains; Fed’s Powell says inflation to rise

Friday, 20 June 2025

• Signs and portents for the U.S. economy:

• Oil prices settle lower as US sanctions ease fears of escalation in Iran

• Oil hedging volumes hit new records as US producers rush to lock in soaring prices
• Citi sees oil prices of $75-$78/bbl if war disrupts 1.1 mln bpd of Iran’s oil exports

Fed divided over need for rate cuts, Fed minions in “no rate cut” camp cling bitterly to claims tariffs cause inflation, others say they’ll cut rates in Fall 2025:

• Fed split over whether to hedge on inflation, proceed with cuts

• Exclusive: Fed’s Barkin: No rush to cut, can’t dismiss inflation risks from tariffs

• Still early to assess tariff impact on economy, Fed report says
• So, has anything actually gotten more expensive because of Trump’s tariffs?

Fed’s Daly says a rate cut in the fall could be appropriate

Waller Puts In Bid For Next Fed Chair, Says Powell Should Cut “As Early As July”

World central bankers capitulate and go into full rate cut mode:

• Oil, war and tariffs tear up markets’ central bank roadmap
• Liquidity Floodgates Open As 3 Central Banks Unexpectedly Cut Rates In Under 24 Hours

• Return of Zero Interest Rate Policy as Swiss Central Bank Cuts Rates
• Norway central bank cuts rates in surprise move, eyes further reduction
• Sweden’s Central Bank Cuts Rate Amid Economic Uncertainty

Bank of Mexico seen cutting key rate by 50 basis points next week

Nasdaq, S&P, and Dow finished mostly lower as markets seesawed back and forth

• S&P 500, Nasdaq finish lower; investors uneasy about Middle East conflict

The Atlanta Fed’s GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 fell to +3.4% from the +3.8% level recorded in the previous week.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Federal Reserve official trying to pull down a sign that says ‘NO RATE CUT FOR YOU’ while a disappointed bull watches”.