Fed decision, Trump-Starmer trade deal, and a market losing steam

2 minutes read

18 June 2025

Fed decision, Trump-Starmer trade deal, and a market losing steam

It’s not every day that Wall Street wakes up to a cocktail of central bank suspense, global politics, and a market that’s suddenly lost its nerve. But that’s exactly where we find ourselves this Wednesday. The US stock market, which has spent much of 2025 charging upwards, is now pausing for breath—and investors are watching every move.

Fed meeting jitters and a market that’s lost its swagger

The S&P 500, Dow Jones, and Nasdaq all opened in the red this morning, dragging on after Tuesday’s sharp drop. The Dow closed nearly 300 points lower, while the S&P 500 and Nasdaq both lost close to 1% each. Volatility is back on the menu, with the CBOE Volatility Index climbing over 2% to 21.6.

What’s spooking investors? The Federal Reserve. The central bank is set to announce its latest interest rate decision this afternoon, and while most expect rates to stay put, the real focus is on what Fed Chair Jerome Powell will say about the months ahead. “Investors are looking ahead to Wednesday's release of the Fed's Summary of Economic Projections, which should shed light on the path ahead for monetary policy,” CNBC reported.

Andrew Tyler, JPMorgan’s head of global market intelligence, summed up the mood: “While there has been a strong buy-the-dip mentality with investors having been rewarded for fading negative news this year, we think it’s best to pull back on risk.”

It’s not just the Fed. President Trump’s push for a sweeping tax-cut bill has hit resistance in Congress, adding to the uncertainty. Meanwhile, tensions in the Middle East are simmering, with Trump warning Iran’s leadership that “our patience is wearing thin” and military options reportedly on the table.

Trump-Starmer trade deal and sector shake-ups

In the midst of all this, a rare piece of positive news: UK Prime Minister Keir Starmer and President Trump have signed a new trade agreement. The deal promises to lower US tariffs on key British exports and boost quotas for American agricultural products in the UK. It’s a diplomatic win, but as Trump himself put it, “The UK is very well protected. Because I like them, that’s why, that’s their ultimate protection.”

Back on Wall Street, the sector scoreboard tells its own story. Consumer discretionary, communications, and energy stocks are holding up, while financials and utilities are lagging. Among individual names, Chevron, Visa, and IBM managed small gains, but big tech stocks like Apple, Microsoft, and Nvidia all traded lower. Adobe, T-Mobile, and Tesla were among the session’s biggest losers—down over 3% each. Stock performance chart showing gains and losses for Tesla, Apple, Adobe, Microsoft, Visa, Chevron, and others.

Julian Emanuel, Evercore ISI’s chief equity strategist, offered a word of caution: “Today’s dip buying is based on the belief that the Iran situation will be remediated rapidly. That is not likely to be the case, and even if it were the case, there are a number of other overhanging issues.”

So, as the Fed prepares to take centre stage and global headlines swirl, Wall Street is bracing for a bumpy ride. The message from the experts? Keep your seatbelt fastened—summer could get interesting.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.