S&P 500 logs third straight loss as rate cut timeline and Middle East risks weigh on sentiment
The S&P 500 slipped 0.22% on Friday to close at 5,967.84, marking its third consecutive day in the red. Investors remain cautious as escalating tensions in the Middle East coincide with mixed messaging from the Federal Reserve on interest rate cuts. The Nasdaq Composite also retreated, falling 0.51% to 19,447.41, while the Dow Jones Industrial Average bucked the trend with a modest 35-point gain, finishing at 42,206.82.
Chipmakers led the decline following a Wall Street Journal report that the U.S. may revoke certain export waivers for semiconductor firms. Nvidia dropped over 1%, and Taiwan Semiconductor Manufacturing Co. fell nearly 2%, dragging the VanEck Semiconductor ETF (SMH) down by almost 1%.
Fed officials diverge on rate cut signals
Early gains in the session were short-lived after mixed signals from the Federal Reserve. Governor Christopher Waller suggested a rate cut could come as soon as July, stating, “We’re in the position that we could do this,” during an appearance on CNBC. Still, he acknowledged that consensus from the full committee is uncertain.
Waller’s comments follow Chair Jerome Powell’s Wednesday remarks, where he reiterated the Fed’s commitment to a data-dependent approach. Powell emphasized that the economic effects of Trump’s proposed tariffs remain unclear, making it difficult to justify immediate rate cuts.
Former President Donald Trump responded by renewing his criticism of Powell, calling him “stupid” and accusing him of costing the U.S. “hundreds of billions” by delaying action on rates.
Middle East volatility compounds investor caution
Beyond monetary policy, rising geopolitical tensions continue to weigh heavily on markets. Reports indicate Israeli Prime Minister Benjamin Netanyahu has instructed his military to prepare strikes on key Iranian government and strategic targets. Trump is reportedly considering direct U.S. involvement, with a decision expected within two weeks.
Iran’s Supreme Leader Ayatollah Ali Khamenei dismissed Trump’s threats as “ridiculous,” raising fears of further escalation in the region. Traders appear hesitant to hold risk positions over the weekend, awaiting clarity on potential military action.
Weekly market snapshot
Despite Friday’s losses, weekly performance was mixed across the major indexes. The S&P 500 closed the week down 0.2%, the Nasdaq added 0.2%, and the Dow edged up a negligible 0.02%.
Analysts remain divided on short-term direction. “With so much uncertainty going on in this world, who really wants to go long over the weekend?” asked Sam Stovall, chief investment strategist at CFRA Research. Still, he noted that the S&P 500 remains just 3% below its 52-week high — a level that could be tested again if geopolitical concerns ease.