Morning in New York: News Drives Volatility

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Market participants continue to focus on the outcome of the first Federal Reserve meeting chaired by Kevin Warsh. As expected, the central bank kept the rate in the 3.5–3.75% range, but half of the members of the Federal Open Market Committee (FOMC) anticipate at least one rate hike this year. Warsh did not provide his own rate forecast, but during the press conference he repeatedly emphasized his intention to curb inflation. The new Fed chair also announced the creation of five working groups to review policies on communications, the balance sheet, data sources, the impact of AI, and the approach to inflation. The market interpreted the regulator’s tone as “hawkish,” which put pressure on stocks.

Foreign policy news signaled progress toward resolving the Middle East conflict. U.S. President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding aimed at ending the war and paving the way for a long-term peace agreement. The document calls for an immediate cessation of Israeli military operations in Lebanon, permission for duty-free transit of merchant ships through the Strait of Hormuz for at least 60 days, and further resolution of issues related to the Islamic Republic’s nuclear program.

This Thursday, as usual, unemployment insurance claims data will be released. The consensus estimate for initial claims for the week ending June 13 calls for a decline from 229,000 to 225,000, while forecasts for continuing claims point to a decrease from 1,795,000 to 1,789,000. The Philadelphia Fed’s Manufacturing Activity Index for June will also be released (consensus: +12 points, Ma: -0.4 points) and the Leading Economic Index for Ma (consensus: 0.25%, April: 0.1%).

Before the main session opens, Kroger (KR) and Accenture (ACN) will report their quarterly results.

S&P 500 futures are showing positive momentum. We assess the risk balance for the upcoming trading session as neutral amid high volatility. The signing of a memorandum between the U.S. and Iran and the decline in the geopolitical premium on oil prices are providing support to the bulls. At the same time, hawkish signals from the Fed, the increased likelihood of a rate hike, and rising Treasury yields continue to limit demand for risky assets.

— Steel Dynamics (STLD) shares are down about 3% following the release of its second-quarter earnings guidance, which is projected to be in the range of $3.51–3.55 per share, compared to a consensus estimate of $4.16. Nevertheless, the new guidance implies growth compared to the previous quarter and the same period last year. Investor sentiment was also weighed down by a $16 million asset write-down related to the relocation of the company’s aluminum production facility from Arizona to Mississippi.

— Rumble (RUM) shares are up more than 20% following the announcement of its rebranding as RUM Group and the consolidation of its video, cloud, and AI infrastructure businesses under a single brand. Rumble Cloud has been renamed Quake AI. This structure will include the AI, cloud, and computing assets of Northern Data, whose acquisition expanded the company’s presence in AI infrastructure.

— Smith & Wesson Brands (SWBI) shares surged more than 18% following the release of its earnings report and strong guidance for fiscal year 2027. The company forecasts revenue growth at a mid-single-digit rate; in the first quarter, sales are expected to increase by 15–20% year-over-year, with margins rising by 1–2 percentage points due to increased production volumes.

— Legend Biotech (LEGN) shares are down about 6% following the announcement of a placement of 7.7 million depositary receipts at $29.35 per unit. The company expects to raise about $226 million before expenses. Underwriters have been granted a 30-day option to purchase up to 1.155 million additional depositary receipts.

— Apple (AAPL) shares are up about 1% following CEO Tim Cook’s announcement of plans to raise prices on certain products to offset rising costs for memory chips and storage devices.

— Alkermes (ALKS) shares are up about 2% in response to the release of results from a Phase II study of alixorexton for the treatment of type 2 narcolepsy. The drug met both primary endpoints, demonstrating improvements in wakefulness and daytime sleepiness, with no serious side effects reported. The company has already begun Phase III of its clinical program.

Trading on June 17 on U.S. stock exchanges ended in negative territory. The S&P 500 fell 1.21%, the Nasdaq 100 dropped 0.99%, the Dow Jones declined 0.97%, and the Russell 2000 fell 0.72%. The main reason for the sell-off was the Fed’s hawkish rhetoric, which led to a reassessment of market expectations regarding the future course of monetary policy. A correction in the stocks of major technology companies put additional pressure on the stock indices. All sectors in the S&P 500 ended the day in the red. The IT sector (XLK: -0.34%) posted the smallest decline, supported by individual chipmaker stocks, along with the industrial sector (XLI: -0.14%). Telecom stocks (XLC: -2.78%) led the list of underperformers amid weak performance by internet and media companies.

The median interest rate forecasts for 2027–2028, based on the results of the FOMC meeting that concluded yesterday, were revised upward. Regulatory Chairman Kevin Warsh noted that the restrictive effect of current monetary policy is most noticeable in the housing sector. Against this backdrop, the market began to price in the likelihood of a rate hike as early as September, which led to a rise in Treasury yields and a strengthening of the dollar.

Macroeconomic statistics came in better than expected. Total retail sales in May rose 0.88% MoM, compared with a consensus estimate of 0.55%; sales excluding automobiles increased 0.82% MoM, compared with an expected 0.6%; while the figure excluding autos and fuel rose 0.53% MoM. Pending home sales rose by 3.8% MoM—the largest increase since September 2024—although the consensus forecast had called for an increase of only 0.95%. Nevertheless, the strong macroeconomic data heightened investors’ concerns that interest rates would remain high for a longer period and failed to offset the negative reaction to the outcome of the Fed meeting.

— uniQure (QURE: +78.4%) announced that it filed a Biologics License Application (BLA) in the third quarter for AMT-130 to treat Huntington's disease.

— AST SpaceMobile (ASTS: +3.9%) announced the successful launch of three BlueBird satellites into orbit.

— Intel (INTC: +3.4%) announced the start of “early” production using its cutting-edge 18A-P process technology.

— CME Group (CME: -3.5%) announced that Terry Duffy will step down as CEO on March 1 of next year, handing the position over to current CFO Lynn Fitzpatrick.

This article was AI-translated and verified by a human editor