Trump calls for Fed rate cuts defying Powell’s moves
The Federal Reserve kept its benchmark interest rate unchanged on June 18, defying President Trump’s calls for immediate cuts despite increasing political pressure.
Cheddar
U.S. stocks opened higher, with the broad S&P 500 and tech-heavy Nasdaq close to their regular-session record highs.
Micron’s strong quarterly results are re-fueling artificial intelligence optimism. Shares of Nvidia climbed to a record high.
Meanwhile, President Donald Trump’s new aim at Federal Reserve Chairman Powell may also accelerate bets for faster rate cuts.
For months, Trump has berated Powell for holding interest rates steady. He’s now considering selecting and announcing Powell’s replacement early around September or October, or even this summer if Trump really gets fed up, the Wall Street Journal reported. An early announcement would allow the new pick to make policy and interest rate comments in the background and undermine Powell.
Lower interest rates make borrowing less expensive, which encourages companies and individuals to spend more and boost the economy.
At 9:35 a.m. ET, the blue-chip Dow added 0.52%, or 225.53 points, to 43,207.96; the S&P 500 rose 0.38%, or 23.17 points, to 6,115.33. The Nasdaq gained 0.27%, or 53.98 points, to 20,027.53. The benchmark 10-year Treasury yield fell to 4.265%.
Powell just wrapped up two-days of testimony before Congress, reiterating his wait-and-see approach to interest rates. He stuck to his script, saying he wanted to wait to see the effects of tariffs on inflation, the economy and the labor market before making any interest rate decisions.
Before the bell, weekly initial jobless claims data showed fewer people than expected filing for unemployment benefits. However, recurring claims — an indication of how long people are remaining unemployed and receiving benefits — jumped to the highest since November 2021.
Meanwhile. gross domestic product (GDP) for the first three months of the year fell 0.5%, due to an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending, the Bureau of Economic Analysis said. These were partly offset by increases in investment and consumer spending, it said.
Economists say the GDP figures were skewed by the surge in imports to front run Trump’s tariffs. They don’t expect that to happen again in the second quarter so GDP should bounce back.
The government previously estimated the economy shrank 0.2% in the first three months.
More inflation data ahead
Powell, known for being data-dependent for his interest rate decisions, will get more of it, including inflation data, at the end of the week.
The Fed’s preferred gauge of inflation is expected to have risen 2.3% in May on an annual basis, with the core rate excluding food and energy up 2.6%. Most economists expect those numbers to continue rising this summer.
Along with inflation data, investors will also get a glimpse of consumer spending through personal consumption expenditures, or PCE, data. Consumer spending makes up roughly two-thirds of economic activity.
Corporate news
- Micron’s results topped analysts’ forecasts in the third fiscal quarter. The maker of memory and storage products also issued guidance for the last three months of its fiscal year that was above expectations. Shares rose fractionally.
- H.B. Fuller topped estimates for the latest quarter and issued a strong full-year outlook. Share jumped 11.27%.
- Kratos Defense & Security Solutions plans to sell $500 million of its common stock in an underwritten public offering. Shares dropped 5.54%.
- Investment bank Jefferies’ quarterly results missed analysts’ forecasts. Shares dipped.
- Drug store chain Walgreens’ quarterly results beat forecasts. Shares are just higher.
- Spice maker McCormick topped analysts’ forecasts for quarterly results and said it could manage higher tariffs. Shares rose 5.11%.
Cryptocurrency
The Federal Housing Finance Agency ordered Fannie Mae and Freddie Mac to formally consider cryptocurrency as an asset in single-family mortgage loan risk assessments. The housing finance companies must develop proposals that include digital assets, without requiring borrowers to liquidate them into U.S. dollars prior to a loan closing.
Bitcoin was last down 0.12% at $107,211.90.
(This story was updated with new information.)
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
