U.S. Stocks Rise Amid Middle East Tensions, Fed Rate Decision Awaited

U.S. stocks opened slightly higher on Wednesday, with traders closely monitoring the latest developments in the Middle East and preparing for the Federal Reserve's upcoming interest rate policy decision. The conflict between Israel and Iran, which entered its sixth day, has intensified speculation about the U.S. potentially getting directly involved in the Middle East conflict. Iran's Supreme Leader Ayatollah Khamenei stated that Iran would not surrender and warned the U.S. of severe consequences if it intervened militarily. He also expressed opposition to "imposed peace," suggesting that Iran would not participate in any U.S.- or Israel-led efforts to force a ceasefire.

The U.S. President had previously threatened Iran's leadership on the Truth Social platform, demanding an unconditional surrender. The possibility of the U.S. getting directly involved in the Middle East conflict has grown, with the President discussing the deteriorating situation with the national security team. Several current and former U.S. officials have revealed that the President is considering military options against Iran.

Analysts have warned that a U.S. military strike on Iran could open a "Pandora's box," potentially consuming a significant amount of the President's remaining time in office. The international and sustainable economy manager noted that the Middle East situation remains unresolved and that the President's statements could make the region even more dangerous. The market is trying to assess whether the U.S. will engage in large-scale military intervention, with oil prices and exchange rates already reflecting some of the risks associated with the deteriorating situation.

The U.S. is seen as crucial in destroying Iran's nuclear program, although it has so far refused to join military operations against Iran at the request of some political allies. The U.S. has only supported Israel by assisting in intercepting Iranian missiles.

The Federal Reserve is set to announce its interest rate decision at 2 p.m. Eastern Time. While the market expects rates to remain unchanged, investors will focus on Chairman Powell's remarks during the subsequent press conference. The Federal Open Market Committee will also release the "dot plot," which will provide insights into policymakers' predictions for future interest rate paths.

The ongoing geopolitical tensions and the Trump administration's tariff policies have increased uncertainty for Federal Reserve policymakers. The market's focus will shift to the latest growth, unemployment rate, and interest rate expectations. Analysts noted that while economic forecasts and the interest rate "dot plot" may guide market expectations, rising geopolitical and trade uncertainties mean that the Federal Reserve's growth and inflation predictions may not be precise. The Federal Reserve is likely to reiterate its current policy stance as appropriate, with future policy decisions continuing to depend on data.

The U.S. Department of Labor reported that the number of Americans filing for unemployment benefits for the first time decreased slightly, stabilizing near an eight-month high. As of the week ending June 14, initial jobless claims fell by 5,000 to 245,000. Economists surveyed had expected 245,000 claims. According to data released by the Labor Department on Wednesday, the number of people continuing to receive jobless benefits also decreased slightly to 1.95 million for the week ending June 7.

The U.S. Census Bureau reported that housing starts fell to a seasonally adjusted annual rate of 1.256 million units, down from 1.392 million in the previous month and below the expected 1.35 million. Economists surveyed had predicted a range of 1.3 million to 1.4 million housing starts. Single-family housing starts rose to 924,000 units, while multi-family housing starts fell to 332,000 units. Building permits decreased to 1.393 million units, down from 1.422 million in April. The expected figure was 1.422 million units. Housing completions rose to 1.526 million units, up from 1.448 million in the previous month.

Citi Group believes that NVIDIA remains one of the most attractive U.S. semiconductor stocks, raising its price target to 180 dollars and maintaining a "buy" rating. Moneta Markets noted that recent political controversies and strategic shifts surrounding Musk have significantly impacted Tesla's brand reputation and market performance. Facing strong competition from companies like BYD, Xiaopeng, and Li Auto, Tesla is losing its leading position in the electric vehicle market, with declining market share, consumer sentiment, and product innovation.

Microsoft and AMD announced a strategic partnership to co-design multiple device chips, including the next-generation Xbox console. This news has garnered widespread attention as it signals a significant shift in the gaming industry. Microsoft's Xbox division head detailed the collaboration, emphasizing the focus on a multi-device ecosystem to create a gaming platform that accompanies players continuously.

Amazon's CEO stated in a memo to employees that the company's overall workforce will shrink in the coming years due to the proliferation of generative AI and intelligent agent technologies. The CEO of OpenAI, the creator of ChatGPT, revealed that Meta Platforms offered up to 100 million dollars in signing bonuses to its employees in an attempt to poach talent. Ericsson and M1 collaborated in Singapore to utilize AI for automation. Morgan Stanley highlighted the potential for Deutsche Bank's private banking business to outperform market expectations. Honda launched a micro-mobility startup called Fastport. Xiaopeng Motors received an upgraded rating to "buy" from Goldman Sachs. TSMC's 2nm process technology achieved a yield rate of over 60%, surpassing Samsung. Over 130,000 employees' data from UBS was leaked to the dark web. Cryptocurrency-related stocks rose after the U.S. Senate passed the "Stablecoin Trust and National Innovation Act."