After a mixed day yesterday, stocks are under modest pressure ahead of a key monetary policy meeting. Crude oil is spiking, putting downward pressure on gold and silver, while Treasuries and the dollar are mostly flat.
Federal Reserve meetings haven’t featured much in the way of fireworks for years – in part because Fed officials have steered Wall Street to expect specific outcomes ahead of time. But new Fed Chair Kevin Warsh is operating differently, offering less in the way of forward guidance. Plus, the outlook for inflation and growth is more uncertain.
Result: While the Fed will likely keep its interest rate target at 3.5% to 3.75%, it could hike by 25 basis points. Markets are pricing in about a one-in-three chance that happens. The Fed hasn’t made any rate adjustments since late-2025, when it cut rates three times.
Fed Funds Rate Target (Upper Limit of Range)
Source: FRED
Iran launched surprise missile attacks against US forces in the Middle East overnight, while the US joined Saudi Arabia in targeting Iran-allied militia forces that operate in Iraq. The strikes ended a brief period of détente, and oil prices jumped in response. WTI crude futures were recently trading around $84 a barrel, up from the high-$60s a month ago.
Finally, it was another day of chaotic trading in South Korea – with the semiconductor-levered stock market plunging 13% at one point. That triggered circuit breakers for a second straight day, though the Kospi ultimately bounced and closed down “only” 6%.
A fresh report from chipmaker SK Hynix Inc. (SKHY) helped trigger the mayhem. The company reported a six-fold surge in quarterly earnings, but also said capital spending would jump 50% to $31 billion in 2026. The stock tanked 19% in response. SK recently held the largest offering of US tracking shares by a foreign company, raising $26.5 billion with its Nasdaq listing.
