Market Wrap | Federal Reserve Cautious on Rates Amid Tariff Inflation Concerns

On June 20, 2025, Federal Reserve officials expressed concerns about the impact of tariffs on inflation, with some indicating no urgency to cut rates, despite falling inflation and a strong labor market. Additionally, liquidity in the U.S. stock, corporate bond, and municipal bond markets has significantly deteriorated, highlighting continued sensitivity to trade policy uncertainty. Meanwhile, the S&P 500 index fell 0.22%, the Dow Jones Industrial Average rose 0.08%, and the Nasdaq Composite index dropped 0.51%.

The market saw a mixed performance across various sectors. The technology, healthcare, communication services, and materials sectors underperformed the S&P 500. Conversely, the utilities, energy, industrials, financials, and consumer staples sectors bucked the trend and posted gains.

Alphabet's shares experienced a significant decline today, with Class A shares dropping by 3.85% and Class C shares falling by 3.59%. The downturn was primarily driven by EU antitrust scrutiny and a Turkish probe into its ad products, as well as a recent court case in the EU over monopolistic practices. Meanwhile, Accenture's stock plummeted by 6.86% due to concerns over declining bookings, which raised worries about the company's future business prospects.

Next Technology saw a remarkable surge of 158.65% in its stock price. Meanwhile, Wheeler Real Estate experienced a significant rise of 110.53%, driven by strategic initiatives and bullish sector trends. On the other hand, Nature Wood Group Ltd faced a substantial drop of 69.80%, with a 36.41% pre-market decline on June 20, 2025, reflecting investor concerns. SeaStar Medical also saw a notable decrease of 63.89%, with the low offering price indicating limited investor confidence or financial pressure.

The Federal Reserve is maintaining a cautious stance regarding interest rate changes due to persistent inflation risks and uncertainties related to tariffs. Richmond Fed President Barkin emphasized the need to monitor the impact of new import taxes on inflation before considering rate cuts. Meanwhile, liquidity in U.S. stock, corporate bond, and municipal bond markets has significantly deteriorated, reflecting increased sensitivity to trade policy developments. Additionally, the use of the Federal Reserve's overnight reverse repurchase agreements totaled $138.283 billion, highlighting liquidity management measures. In corporate news, Apple is considering the acquisition of Perplexity AI to enhance its AI capabilities, particularly for developing a search engine, while Meta has shifted its investment focus to Scale AI.