All three major U.S. stock indices closed down more than 1%, with the VIX fear index rising back above 18. Meta fell over 5%, leading the decline among the “Big Seven” tech stocks. SpaceX dropped nearly 5%. The rate-sensitive 2-year U.S. Treasury yield rose 16 basis points, while the 10-year yield increased over 8 basis points. The U.S. Dollar Index surged 0.86%, reaching a two-month high. Spot gold prices fell over 2.5% at one point, erasing all gains accumulated this week due to peace talk expectations. WTI crude oil prices remained near $76 per barrel.
The Federal Reserve’s dot plot indicates a sharp increase in expectations for a rate hike within the year, driving short-term Treasury yields and the U.S. dollar to strengthen significantly. U.S. stocks, gold, and cryptocurrencies broadly declined, while crude oil closed flat after volatile fluctuations.
Hawkish signals from the Federal Reserve directly impacted the short-end U.S. Treasury market, with the 2-year yield surging approximately 13 to 16 basis points in a single day to around 4.21%. Meanwhile, the 30-year yield edged down about 2 basis points, causing the spread between the 2-year and 30-year yields to narrow sharply to its flattest level in over a year. Bret Kenwell of eToro noted that the greater impact came from the interest rate projections. While the market had been somewhat prepared, the Fed’s dot plot indicated that policymakers were willing to maintain a more hawkish stance than investors had anticipated. However, many analysts remained cautious about the actual path of rate hikes. Kay Haigh of Goldman Sachs Asset Management stated that although the Fed’s hawkish shift was not solely driven by high energy prices, the base case remains a narrowly avoided rate hike, with subsequent inflation data being critical. Ellen Zentner of Morgan Stanley Wealth Management judged that despite the more hawkish tone in the statement, the Fed’s next move could still be a rate cut, but it would need to wait for inflation to decline sufficiently to provide room for the committee to act. In contrast to the Fed shock, the oil market was more influenced by geopolitical news on the day, ultimately closing nearly flat. WTI crude oil prices remained around $76 per barrel. During the session, oil prices stabilized and rebounded after touching the 200-day moving average. Combined with data from the U.S. Energy Information Administration showing a significant drop in crude inventories and Cushing storage levels falling to “tank bottom” levels, WTI briefly moved higher. However, prices then plunged sharply on reports of progress in U.S.-Iran talks, only to recover quickly after Trump stated that he would not rule out resuming military action if dissatisfied with the terms of the agreement. Sentiment oscillated repeatedly between bullish and bearish. Notably, the spot Brent crude price, which represents the most important pricing benchmark for physical crude, continued to decline, largely erasing the war premium. Trump acknowledged that part of the reason he approved the memorandum of understanding was because he was told the U.S. Strategic Petroleum Reserve would be exhausted in about four weeks. Driven by the repricing of interest rate expectations, the U.S. dollar index strengthened significantly, gaining 0.8%. The dollar rose against the euro and the British pound to approximately 1.1490 and 1.3281, respectively, reaching nearly two-month highs. Gold came under pressure, with spot prices falling about 1.9% to $4,247.93 per ounce, erasing all gains accumulated this week from expectations of U.S.-Iran talks. Bitcoin experienced sharp intraday volatility, ultimately closing down about 2.3% near $64,301, falling below the $64,500 support level.
All three major US stock indices fell more than 1% on Wednesday, with the VIX panic index closing up 12.31%, breaking back above 18. The Philadelphia Semiconductor Index bucked the trend, closing up 1.38%. Defensive sectors such as consumer staples and utilities saw significant declines. Meta fell over 5%, leading the decline among the Magnificent Seven tech stocks. SpaceX, in its first decline since listing, closed nearly 5% lower.
Benchmark US Stock Indices: The S&P 500 fell 91.25 points, or 1.21%, to 7,420.10. The Dow Jones Industrial Average fell 507.12 points, or 0.98%, to 51,492.55. The Nasdaq fell 354.688 points, or 1.35%, to 26,021.656. The Nasdaq 100 fell 297.181 points, or 0.99%, to 29,670.948. The Russell 2000 fell 0.72%, to 2,917.982. The VIX panic index closed up 12.31%, at 18.43. US Sector ETFs: The internet stock index ETF fell 2.89%, while consumer discretionary and daily consumer goods ETFs fell up to 2.51%. The semiconductor index ETF rose 1.29%. (US Stock Sector ETFs on June 17) Magnificent Seven Tech Stocks: The Magnificent Seven index fell 2.38%, to 210.21 points. Meta fell 5.44%, Microsoft fell 3.79%, Amazon fell 3.46%, Google A fell 2.53%, Tesla fell 2.05%, Nvidia fell 1.33%, and Apple fell 1.10%. Chip Stocks: The Philadelphia Semiconductor Index rose 182.848 points, or 1.38%, to 13,477.072. TSMC ADR rose 1.48%, and AMD rose 1.02%. Chinese Concept Stocks: The Nasdaq Golden Dragon China Index fell 1.14%, to 6,122.30 points. Among popular Chinese concept stocks, Li Auto fell 3.4%, Alibaba fell 3.1%, NIO rose 0.2%, and ASE Technology rose 2%. Other Individual Stocks: Circle rose 1.24%. CME Group shares fell 3.5% after announcing CEO Terry Duffy would step down and transition to the role of Executive Chairman. Footwear manufacturer Allbirds transformed into an artificial intelligence company and appointed former Amazon executive Nadia Carlsten as CEO, causing its shares to surge 39%.Eurozone blue-chip stocks set new closing record highs for four consecutive trading days ahead of the Federal Reserve’s policy statement, with BMW falling more than 8.3%. The Dutch stock market closed nearly 1.2% higher, alongside Italian and Spanish stock indices which also reached record closing highs.
Pan-European Indices: The European STOXX 600 Index closed up 0.52% at 639.31 points, achieving a new record closing high for three consecutive trading days, accumulating a 3.42% gain since June 11. The Eurozone STOXX 50 Index closed up 0.68% at 6,300.07 points, setting a new record closing high for four consecutive days. National Indices: Germany’s DAX 30 Index closed up 0.10% at 24,934.67 points. France’s CAC 40 Index closed down 0.20% at 8,430.79 points. The UK FTSE 100 Index closed up 0.14% at 10,508.61 points. (Performance of Major European and U.S. Indices on June 17) Sectors and Stocks: Among Eurozone blue-chip stocks, Bayer closed up 4.80%, ASML Holding rose 4.10%, Siemens Energy gained 3.60% ranking third, Deutsche Bank increased 2.45%, and UniCredit rose 2.43%. Among all constituents of the European STOXX 600 Index, Stroer SE & Co. KGaA closed up 10.80%, Auto1 Group rose 8.35%, Endeavor gained 6.82%, Aixtron SE increased 6.72%, and ASM International gained 5.89% ranking fifth. The two-year U.S. Treasury yield rose approximately 13.3 basis points on the day of the Federal Reserve’s interest rate decision, while the two-year real yield increased about 20 basis points on the debut day of Kevin Warsh. U.S. Treasuries: At the New York close, the yield on the benchmark 10-year U.S. Treasury note rose 4.74 basis points to 4.4869%. The two-year U.S. Treasury yield rose 13.28 basis points to 4.1843%, trading within a range of 4.0390% to 4.2181% during the session. (U.S. Treasury Yields for Major Maturities) European Bonds: At the European close, the yield on the 10-year German Bund fell 0.3 basis points to 2.927%, trading within a range of 2.941% to 2.914% during the session. The yield on the 10-year UK Gilt fell 3.8 basis points to 4.750%. The two-year UK Gilt yield declined 4.0 basis points to 4.143%. The 10-year bond yields of France, Italy, Spain, and Greece remained largely stable.The Bloomberg Dollar Index posted its largest intraday gain since March 13, with non-USD currencies broadly falling on the debut day of Kevin Warsh. The Japanese yen hit a new low since July 2024.
US Dollar: At the New York close, the ICE US Dollar Index rose 0.82%, reaching a daily high of 100.362 points. The Bloomberg Dollar Index increased by 0.69% to 1213.65 points, trading within an intraday range of 1204.47 to 1213.83 points. Non-USD Currencies: At the New York close, the euro fell 1.05% against the dollar to 1.1478, the British pound dropped 1.25% to 1.3262, and the dollar rose 1% against the Swiss franc to 0.8016. Among commodity currencies, the Australian dollar fell 0.9% against the US dollar, the New Zealand dollar dropped 1.25%, and the US dollar rose 0.9% against the Canadian dollar. Japanese Yen: At the New York close, the dollar rose 0.2% against the yen to 160.74 yen. The euro fell 0.87% against the yen to a daily low of 184.62 yen; the British pound dropped 0.93% against the yen to a daily low of 213.333 yen. Offshore Chinese Yuan: At the New York close, the dollar against offshore yuan stood at 6.7762 yuan, up 196 points from Tuesday’s New York close, with an intraday trading range of 6.7539 to 6.7816 yuan. Cryptocurrencies: At the New York close, Bitcoin fell 2.4%, dropping below $64,500, while Ethereum dropped 3.5%. Crude Oil: After sharp fluctuations, crude oil settled flat overall, with WTI crude oil prices staying near $76 per barrel. WTI crude oil futures for July closed at $76.79 per barrel. Brent crude oil futures for August closed at $79.55 per barrel. NYMEX gasoline futures for July closed at $2.9096 per gallon, and NYMEX heating oil futures for July closed at $3.1946 per gallon. Natural Gas: NYMEX natural gas futures for July closed at $3.1450 per million British thermal units. Gold: Spot gold fell over 1.6%, briefly dropping below $4,220 after the Warsh press conference. Spot silver fell 3%. Copper in New York fell for three consecutive sessions, dropping 2% intraday. At the New York close, spot gold fell 1.64% to $4,258.59 per ounce. COMEX gold futures fell 1.Gold: Down 70% to $4,280.40 per ounce. Silver: Spot silver fell 2.97% at the New York close to $67.9438 per ounce. COMEX silver futures declined 2.59% to $68.715 per ounce. Other Metals: At the New York close, COMEX copper futures fell 1.68% to $6.4345 per pound. Spot platinum dropped 3.80% to $1,738.29 per ounce; spot palladium fell 2.45% to $1,322.39 per ounce. LME copper futures rose $40 to $13,814 per metric ton. LME nickel futures gained $64 to $18,060 per metric ton. LME tin futures increased $218 to $55,344 per metric ton.
