Will they? Won't they? The financial world is abuzz with speculation over potential U.S. military action in Iran, following Donald Trump's demand for Tehran to surrender. The uncertainty has everyone on edge - especially the stock markets. And it's not doing the Federal Reserve any favors either, as it prepares to make a decision on U.S. interest rates tonight while factoring in yet another destabilizing element.

Only a fool never changes his mind. Just look at the White House's shifting stance. On Friday, Israel launched a strike on Iran. The U.S. turned a blind eye, fully aware of what was coming. Up through Monday, Trump stuck to his usual ambiguous posture - vague statements and a clenched jaw. Then, on Tuesday, a dramatic pivot: a call for Tehran to surrender unconditionally and a warning that the U.S. military might get involved.

These declarations didn't sit well with financial markets, which viewed them as part of a continued escalation. Oil prices jumped again, clawing back earlier losses from Friday. Also worth noting: Trump's interventionist tone has ruffled feathers among some MAGA hardliners, who see it as a betrayal of their core beliefs. But that's another story for another time.

U.S. stocks took a beating during the session. The decline was exacerbated by weaker-than-expected consumer spending in May. Economists believe that consumers front-loaded their purchases in April due to tariff concerns, resulting in a drop in May. The billion-dollar question now is whether this cautious consumer behavior will spread in the months ahead.

The S&P 500 closed down 0.84%. Earlier in the day, the Stoxx Europe 600 had dropped by a similar margin. Despite the recent turbulence, the S&P 500 is still up 1.7% for 2025, while its European counterpart has gained 6.8% - a decent showing considering the year's rocky start.

Today's big headline isn't geopolitical - it's monetary policy. The Federal Reserve began its two-day meeting yesterday and is expected to hold interest rates steady when it announces its decision this afternoon. Even when the outcome is predictable, Fed decisions are closely watched by investors. In this case, rates are expected to remain unchanged, and Fed Chair Jerome Powell is likely to emphasize that there's no urgency to make a move.

Along with the rate decision, the Fed will release updated projections. They're likely to forecast moderate economic growth, slight softening in the job market, and lingering upside risks to inflation. The announcement is scheduled for 2:00 p.m. ET, with Powell's press conference at 2:30 p.m. Investors currently anticipate no change at the next meeting in late July, but the CME FedWatch tool puts the odds of a September rate cut at 63.2%.

All eyes will be on Powell's commentary to gauge Wall Street's reaction. Analysts will also study the Fed's “dot plot,” which illustrates policymakers' expectations for interest rate moves in the short, medium, and long term. Right now, the debate is between one or two rate cuts this year. It might sound like a minor detail, but in the financial world, it's a major deal.

In the Asia-Pacific region, Japan seems unfazed by geopolitical tensions, with the Nikkei finishing up 0.7%. Hong Kong, however, has struggled in recent days and was down over 1% this morning. South Korea and Taiwan posted slight gains, while India and Australia each slipped by around 0.1%. Still, Sydney remains near last week's record highs.

Europe's indices are just slightly up, and so are futures on Wall Street.

Today's economic highlights:

On today's agenda: employment figures in France; retail sales in Germany; and in the United States, the Conference Board's consumer confidence index. 

  • Dollar index: 98,225
  • Gold: $3,384
  • Crude Oil (BRENT): $76.46 (WTI) $72.46
  • United States 10 years: 4.41%
  • BITCOIN: $104,935

In corporate news:

  • General Motors partners with NP Aerospace to explore UK and NATO market opportunities.
  • Amazon plans workforce reduction due to generative AI rollout amidst falling US tech stocks.
  • Meta enhances AI capabilities with $100 million bonuses to recruit OpenAI talent and expands product line with Luxottica.
  • Hasbro Inc. cuts 3% of its workforce as part of a cost-cutting effort.
  • Microsoft confirms it is working on a new Xbox console.
  • Hyatt acquires Playa Hotels & Resorts.
  • General Mills removes artificial colors from all its cereals and foods in the United States.

Analyst Recommendations:

  • Coterra Energy Inc.: Baptista Research upgrades to outperform from buy with a price target raised from USD 30.70 to USD 32.70.
  • Sarepta Therapeutics, Inc.: TD Cowen downgrades to hold from buy with a target price reduced from USD 62 to USD 24.
  • Zoetis Inc.: Stifel downgrades to hold from buy and reduces the target price from USD 165 to USD 160.
  • Broadcom Inc.: Daiwa Securities maintains its buy recommendation and raises the target price from USD 225 to USD 288.
  • Casey's General Stores, Inc.: Wolfe Research maintains its outperform recommendation and raises the target price from USD 442 to USD 584.
  • Cava Group, Inc.: Stifel maintains its buy recommendation and reduces the target price from USD 175 to USD 125.
  • Enphase Energy, Inc.: RBC Capital maintains its sector perform recommendation and reduces the target price from 50 to USD 28.
  • International Game Technology Plc: Baptista Research maintains its buy recommendation and reduces the target price from 25.70 to USD 18.40.
  • Jabil Inc.: Raymond James maintains its strong buy recommendation and raises the target price from USD 170 to USD 230.
  • Lam Research Corporation: B Riley Securities Inc. maintains its buy recommendation and raises the target price from USD 95 to USD 115.
  • Marvell Technology Group Ltd: Cantor Fitzgerald maintains its neutral recommendation with a price target raised from 60 to USD 75.
  • Microchip Technology, Inc.: Truist Securities maintains its hold recommendation with a price target raised from 52 to USD 64.
  • On Semiconductor Corporation: B Riley Securities Inc. maintains its neutral recommendation with a price target raised from 40 to USD 56.
  • Roku, Inc.: Citigroup remains neutral recommendation with a price target raised from USD 68 to USD 84.