Cautious Fed signals cool investor momentum

The US stock market ended Wednesday's session with minor moves, with the S&P 500 barely budging. Investors digested comments from Federal Reserve Chair Jerome Powell, who warned that inflation could reaccelerate into the summer, citing lingering effects of US President Donald Trump's tariff regime. Powell noted those tariffs are beginning to directly impact consumer wallets.

Fed holds policy steady, but hawks gain ground

As widely expected, the Fed kept its benchmark interest rate unchanged. Projections for the year still include two possible cuts, but internal divisions are mounting: a growing number of officials see no reason to ease policy at all. Moreover, the expected pace of rate reductions has been trimmed — now only one 25-basis-point cut is seen in both 2026 and 2027.

Powell's comments shift market tone

Trading began in the green, as investors showed cautious optimism. But sentiment turned after Powell's speech: US Treasury yields clawed back earlier declines, and the S&P 500 lost upward momentum.

Tech gains, energy lags

Sector performance was mixed: information technology led the gains, while energy stocks bore the brunt of the losses. The S&P 500 tech index (.SPLRCT) emerged among the day's leaders, while the energy group (.SPNY) faced the steepest decline.

Performance of key US indices:

The Dow Jones Industrial Average (.DJI) fell by 44.14 points (-0.10%) to 42,171.66

The S&P 500 (.SPX) slipped 1.85 points (-0.03%) to 5,980.87

The Nasdaq Composite (.IXIC) rose 25.18 points (+0.13%) to 19,546.27

Jobless claims dip, but concerns remain

The US Department of Labor reported a slight decline in initial jobless claims compared to the previous week. However, economists warn the drop still reflects weakening momentum in the labor market heading into June.

Regulatory green light spurs crypto market rally

Shares of Circle Internet (CRCL.N), the stablecoin issuer, surged 33.8% after the US Senate approved a bill aimed at establishing a regulatory framework for dollar-linked cryptocurrencies. Market participants viewed the move as a pivotal step toward legitimizing digital assets within the US financial system.

Steel prices climb, Nucor follows suit

Steel giant Nucor (NUE.N) gained 3.3% in market value after posting a quarterly forecast that exceeded analyst expectations. The company cited strong demand and improved margins, prompting investors to adopt a more optimistic outlook on the broader steel sector.

Geopolitics and Fed keep European investors on edge

European stock markets opened lower on Thursday. The pan-European STOXX 600 index slipped 0.6% to 537.37, reaching its lowest level in four weeks. Elevated investor anxiety stems from both Federal Reserve warnings about inflation and concerns over a possible expansion of US involvement in the Middle East conflict.

Trading volumes remain subdued as US markets are closed for a public holiday.

Oil gains, tourism falters

Escalation in the conflict immediately impacted oil prices, sending crude oil prices higher and boosting Europe's energy sector (.SXEP), which gained 0.6%.

Conversely, travel and leisure companies took a hit: the sector index (.SXTP) fell 1.5% as rising oil prices intensified overall market pressure.

Volatility rises, Fed adds to uncertainty

The Euro STOXX volatility index (.V2TX) jumped by 1.38 points to 23.78, its highest level since May 23.

At the same time, Federal Reserve Chair Jerome Powell noted that two rate cuts are possible in 2025 due to inflationary pressures stemming from US tariff policies. His outlook was mixed, leaving markets without a clear sense of how the Fed plans to manage economic risks.

Europe: surprise moves from central banks

The Swiss National Bank, as expected, cut interest rates to zero. However, the day's real surprise came from Oslo. Norway's central bank lowered its interest rate for the first time in five years, trimming it by 25 basis points.

Against this backdrop, Norway's stock index (.OSEAX) managed a 0.1% gain, one of the few bright spots amid widespread losses across European markets.

BoE expected to keep rates on hold

Economists and market participants broadly agree that the Bank of England is likely to keep its key interest rate unchanged on Thursday. Amid volatile inflation dynamics and ongoing economic uncertainty, the central bank appears poised to take a cautious stance, avoiding any rush toward policy easing.

Stora Enso soars as strategic asset review sparks investor enthusiasm

Shares of Finnish forestry and paper group Stora Enso (STERV.HE) surged 17.8%, leading gains on the STOXX 600 index. The rally followed the company's announcement of a strategic review of its assets in Sweden. Investors interpreted the move as a potential precursor to restructuring or asset sales and responded with aggressive buying.

Mandatum slips: shareholder stake cut weighs on stock

Insurance company Mandatum (MANTA.HE) saw its shares drop 5.3%, making it one of the day's notable laggards. The decline followed news that investment group Altor had reduced its stake in the firm. The diminished presence of a major investor raised concerns about the future stability of Mandatum's capital structure.