Pre-Market Pulse 23rd June – Chip Stocks Slide, Fed Divides, and Middle East Keep Markets on Edge

Overnight – Chip Stocks Slide, Fed Divides, and Middle East Keep Markets on Edge

Stocks closed lower Friday, as weakness in chip stocks offset remarks from a top Federal Reserve official calling for rate cuts as soon as the Fed’s next meeting

Wall Street experienced a cautious week, with trading volumes spiking due to a “triple-witching” event and the market closure for Juneteenth. Investors were hesitant to make big moves amid heightened geopolitical tensions and uncertainty over U.S. economic policy. Chip stocks like Nvidia and Broadcom led declines following reports of potential new U.S. restrictions on semiconductor exports to China. Meanwhile, the Federal Reserve held interest rates steady, with officials split on the timing of future cuts. Some, like Fed Governor Christopher Waller, advocated for a rate cut as early as July, citing subdued inflation, while others, including Chair Jerome Powell, warned of persistent inflation risks, particularly if tariffs start impacting consumer prices.

Geopolitical risks were front and center as President Trump announced he would decide within two weeks whether the U.S. would join Israel in direct action against Iran, amid escalating conflict between the two countries. The threat of a broader Middle East conflict and its potential impact on oil prices made investors more risk-averse, pushing oil prices higher and raising concerns about energy-driven inflation. Iran refused to return to nuclear talks while under attack, and European efforts at diplomacy showed little progress. This uncertainty contributed to a mixed market performance, with the S&P 500 ending the week lower and the Nasdaq posting a modest gain.

On the corporate front, Apple accelerated plans to shift iPhone production to India in response to ongoing U.S.-China trade tensions, signaling a significant change in its manufacturing strategy. Darden Restaurants increased its dividend and announced a major share buyback after strong quarterly results, while CarMax reported impressive earnings thanks to higher sales and strong margins. Accenture’s shares fell despite beating earnings estimates, due to weaker bookings. Overall, the week’s trading was volatile, shaped by central bank decisions, mixed economic data, and the looming risk of a wider conflict in the Middle East.