June 17th Market Overview

Happy Wednesday

The Dow hit a record this morning and gave it all back by the close. Warsh's first meeting was supposed to be the start of potential rate cuts. Instead the committee's own forecasts pointed at a hike, and the market spent the afternoon repricing for it.

Let’s dig in...

Today's Big Picture

1. The Fed Turned Hawkish
Rates held steady on a unanimous vote. The real news was the forecast: nine of eighteen officials now expect a hike this year, after most of them saw cuts coming back in March. Warsh didn't submit his own dot and kept circling back to one idea in the presser, that the Fed will get inflation to 2 percent. Trump picked him to cut. Day one, he leaned the other way.

2. Stocks Sold the Fed News
That morning record was gone by the close. Stocks dropped, yields and the dollar pushed up, and gold and bitcoin both gave ground, so cash was about the only thing working. The selling picked up once Warsh started talking, and traders now see a December hike as the base case. Chips were the lone group in the green.

3. Oil Keeps Sliding
Crude sat near three-month lows, and supply is the reason. The IEA now expects the world to pump more oil than it needs by 2027, assuming Gulf output comes back online. The US-Iran deal still gets signed Friday. Watch this one closely, because cheap oil is what could eventually pull inflation down and take the hikes off the table.

Market Overview

Index Performance

Stock Spotlight

SpaceX $SPCX ( ▼ 4.03% )  
fell for the first time since it went public on Friday. After a run that briefly made it the fifth most valuable company in the country, it dropped back below Amazon to sixth.

JPMorgan $JPM ( ▲ 0.68% )  
closed at a new all-time high, its first since early January. While everyone watched the rocket stock reverse, the country's biggest bank was quietly making records.

CarMax $KMX ( ▼ 9.0% )  
beat on earnings but the stock fell hard anyway. New CEO Keith Barr told analysts the company is not efficient enough and its costs are too high, then laid out a turnaround plan. A good quarter was not enough to outrun the to-do list.

Big Name Updates

Tesla $TSLA ( ▼ 2.19% ) is down on the year, but Wolfe Research says the stock is holding up because investors are betting on an eventual merger with Elon Musk's SpaceX. For the shares to really move, Wolfe says people want real progress on robotaxis and robots, and the Austin rollout has been slower than promised.

Uber $UBER ( ▼ 2.21% ) is teaming up with Nuro and Lucid to put a robotaxi service on the road in Houston by mid-2027. It also signed a separate deal with Stellantis and Wayve to build self-driving cars for Europe and North America.

Other Notable Company News

Snap $SNAP ( ▼ 8.82% )  
got a cool reception from Wells Fargo on its new $2,195 Specs glasses, which analysts called a letdown given how long they took to build.

Robinhood $HOOD ( ▲ 10.14% )  
kept its bullish call at Argus, which says last week's staff cut should speed up decisions and product launches.

CME Group $CME ( ▼ 3.49% )  
said longtime CEO Terry Duffy will step down and hand the top job to finance chief Lynne Fitzpatrick.

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Sector Watch

Bond Market

Yields climbed across the board after the Fed's forecasts came in more hawkish than the market expected.

• The two-year note, the one most sensitive to rate moves, led the way higher.

• The ten-year drifted up as well.

The dollar firmed against major currencies. The real question now is not whether the Fed cuts, but how many times it hikes, and the next inflation print will start to answer it.

Policy Watch

Fed
The bigger surprise was how much Warsh changed the way the Fed talks. He trimmed the official statement to 132 words, down from 345 last time, dropped the old hint that the next move would be a cut, and stopped naming who voted which way.

• He set up five working groups to rethink the Fed's communications, balance sheet, data, jobs, and inflation.

• He wants the Fed leaning on real-time business data instead of older government surveys.

Warsh called it a new chapter and admitted it is a lot for markets to digest in one day. The throughline: this Fed plans to explain itself less and let the numbers speak.

International

• The Bank of Japan lifted rates to 1 percent on Tuesday, its highest in 31 years.

• The European Central Bank raised rates last week for the first time in nearly three years.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

Power Grid Rules, Thursday
Federal energy regulators meet Thursday to set rules for how big power users like data centers plug into the grid. Wait times to connect currently run into years. A former chairman called it potentially the most important move the agency has made in decades, so it matters for every AI buildout name.

Bank of England, Thursday
The UK central bank is expected to hold after inflation there came in cooler than forecast. One more piece of the global rate picture, and a contrast to the harder line the Fed just took.

Thanks for reading - you are now the more informed 🙂

- John

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