Stocks flat as traders digest Fed comments, oil falls
Stocks flat as traders digest Fed comments, oil falls
By Rodrigo Campos and Danilo Masoni Wed, July 1, 2026 at 7:55 PM UTC
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By Rodrigo Campos and Danilo Masoni
NEW YORK/MILAN, July 1 (Reuters) - A gauge of stock markets around the world was little changed to start the quarter on Wednesday as the U.S. central bank head said inflation expectations have fallen but policy won't be loose, while crude oil prices were down as optimism over U.S.-Iran talks eased supply concerns.
Traders also watched for possible Japanese intervention in the currency market after the yen touched fresh 40-year lows against the dollar, even if it rebounded later in the session.
Speaking on a panel of central bankers in Sintra, Portugal, Federal Reserve chair Kevin Warsh said inflation expectations and inflation risks have come down in recent weeks. He said he will stick firmly to the U.S. central bank's 2% inflation target and "disappoint" anyone who expects loose monetary policy.
His comments weighed on the dollar, which has been underpinned by rising expectations of Fed rate hikes this year, as inflation runs well above the central bank's 2% annual target. Still, many analysts believe the inflation picture will improve in the months ahead.
“Nothing that we see suggests that any imbalance either on the activity side or the inflation side is growing rapidly,” said Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank’s New York branch.
“You can afford to wait and see how these longer-term technological trends play out,” Englander added. “What we do see is that unit labor costs are very, very soft, and ultimately that's what the Fed controls.”
The dollar index, which measures the greenback against a basket of major currencies, rose 0.15% to 101.39, with the euro down 0.36% at $1.1379. the yen was last flat on the day against the dollar.
Interest rate futures imply no move from the Fed at its meeting late this month, while a hike in September is priced in.
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Trades also eyed Thursday's economic data expected to show U.S. employers added 110,000 jobs in June, with the unemployment rate holding steady at 4.3%, according to the median estimate of economists polled by Reuters. The ADP National Employment Report on Wednesday showed that private employment rose by 98,000 jobs last month, below economists' forecasts for 118,000 job gains.
In afternoon trading on Wednesday in New York, the Dow Jones Industrial Average rose 50.38 points, or 0.10%, to 52,368.89, the S&P 500 rose 3.37 points, or 0.04%, to 7,502.61 and the Nasdaq Composite fell 69.65 points, or 0.27%, to 26,143.71.
MSCI's gauge of stocks across the globe fell 0.68 points, or 0.06%, to 1,119.78. The pan-European STOXX 600 index fell 0.38%, while Europe's broad FTSEurofirst 300 index fell 11.45 points, or 0.45%. Emerging market stocks rose 0.70 points, or 0.04%, to 1,723.59.
Japan's Nikkei gained 0.6% after surging 37% last quarter, with strong tech demand lifting sentiment among big manufacturers to an eight-year high. South Korea's main index fell about 2%, following a 68% rally last quarter driven by AI-fuelled chip demand.
In energy markets, oil prices fell as optimism over U.S.-Iran talks eased supply concerns.
"There's more optimism as more oil goes through the Strait of Hormuz," said Phil Flynn, senior analyst for Price Futures Group. "The market is signalling that once we get past this, the gloves are going to come off and we're going to probably produce more oil in the world than we ever have."
U.S. crude fell 1.83% to $68.23 a barrel and Brent fell to $71.34 per barrel, down 2.21% on the day. Despite sharp price declines last quarter, both are up almost 20% year-to-date.
Spot gold rose 1.4% after posting on Tuesday its largest quarterly drop since 2013.
(Reporting by Rodrigo Campos in New York and Danilo Masoni in Milan; additional reporting by Nicole Jao, Karen Brettell, Chuck Mikolajczak, Caroline Valetkevitch and Niket Nishant; Editing by Hugh Lawson, Matthew Lewis and Nick Zieminski)
Source: “AOL Money”
