S&P 500 Rally Wavers Before Fed as SpaceX Jumps: Markets Wrap
(Bloomberg) — A rally that sent stocks to the brink of all-time highs wavered on the eve of the first Federal Reserve rate decision under Kevin Warsh, with a another slide in oil prices driving bond yields lower.
Following a surge fueled by easing geopolitical tensions, the S&P 500 fluctuated. Another jump in SpaceX put Elon Musk’s rocket company on track to overtaking Amazon.com Inc. and Microsoft Corp. to become the fourth-largest publicly traded firm. Brent oil briefly fell below $80 as the agreement to reopen the Strait of Hormuz boosted expectations for a revival in supply.
As the US and Iran prepare to formally sign their interim peace deal on Friday, traders are looking for clues from policymakers on the impacts of the war. With a well-flagged hike from the Bank of Japan seen as an exception, most developed-world central banks including the Fed are widely expected to make no changes this week.
The Fed meeting may not deliver a rate hike, but it could deliver something more important: the first real signal of how Warsh plans to approach inflation, noted Bret Kenwell at eToro. Investors are trying to figure out whether the new Fed chair will use his first major moment to reset expectations, he said.
“In a matter of months, the narrative has shifted from ‘how many rate cuts this year?’ to ‘how many rate hikes are on the table?’” Kenwell noted. “That’s a big swing, and it puts Warsh in a difficult spot: He can acknowledge the recent pullback in oil prices and sound patient, but he can’t afford to look complacent if broader inflation pressures are moving the wrong way.”
Investors are wondering how, specifically, the Warsh Fed will change the way it communicates with them, including whether the quarterly Summary of Economic Projections, or SEP, might be slimmed down. That document includes forecasts for key economic variables and the famous “dot plot” showing where policymakers see interest rates heading.
“Investors will be watching the SEP closely for clues on whether rate hikes are truly on the table in the second half of the year,” Kenwell said. “Depending on the tone and how much this meeting reshapes investor expectations, it could dictate the market’s narrative for the next several weeks, at least until earnings season takes over.”
At TD Securities, the strategists are betting on a drop in the easing bias, upward revisions to inflation forecasts, and the median dot showing no cuts in 2026 as well as next year. They say a strong pushback from Warsh is unlikely as that would damage his credibility and effectiveness.
While investors expect no changes to monetary policy, Warsh has strong views on the current inflationary environment and on what the Fed should and shouldn’t be, according to Christian Hoffmann at Thornburg Investment Management. That means the potential for volatility around Warsh’s communication is likely underpriced by the market, he added.
“The backdrop is tricky, with inflation rising strongly in recent months,” Hoffmann noted. “At the same time, progress on the US-Iran conflict would certainly take some of the acute pressure off energy prices and inflation, and give central bankers a stronger reason to watch the dust settle.”
Corporate Highlights:
SpaceX formally agreed to take over Cursor in a deal that values the artificial intelligence coding startup at $60 billion, cementing a key part of Elon Musk’s efforts to catch up with rivals on coding tools. Microsoft Corp. introduced updated Surface Pro and Surface Laptop devices, refreshing both products with faster graphics and new chips from Qualcomm Inc. to more effectively court creative professionals and artificial intelligence super users. OpenAI’s net losses jumped eightfold after the ChatGPT maker spent more than $34 billion on research, marketing and other costs in 2025, the Financial Times reported, citing unidentified people familiar with the matter. Yum! Brands Inc. is selling its struggling Pizza Hut division for $2.7 billion, allowing the restaurant operator to focus on its better-performing KFC and Taco Bell chains. Robinhood Markets Inc. said it’s cutting 10% of its workforce, a reduction of around 300 positions, to “remain lean and disciplined” as it develops new products. Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 10:19 a.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average rose 0.8% The Stoxx Europe 600 rose 0.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1594 The British pound was unchanged at $1.3414 The Japanese yen was little changed at 160.43 per dollar Cryptocurrencies
Bitcoin fell 0.9% to $65,873.01 Ether fell 1.5% to $1,789.29 Bonds
The yield on 10-year Treasuries declined two basis points to 4.45% Germany’s 10-year yield declined two basis points to 2.94% Britain’s 10-year yield declined one basis point to 4.80% Commodities
West Texas Intermediate crude fell 3.6% to $77.81 a barrel Spot gold rose 0.4% to $4,330.36 an ounce ©2026 Bloomberg L.P.
