Stock market today: Dow, S&P 500, Nasdaq rise with Trump's Iran decision, Fed rate cuts in focus

US stocks closed mixed Friday amid developments on multiple fronts, including a WSJ report that the US may revoke semiconductor manufacturers' access to American tech in China, pressuring chip stocks like Nvidia. President Trump set a two-week deadline on deciding whether to enter the Middle East conflict, adding uncertainty but also a window for diplomacy, while Fed Governor Waller suggested possible rate cuts by July due to tame inflation data, contrasting with Powell's recent stance and leading to a slight increase in bets for a July cut.

Analysis

US equity markets closed a mixed session as investors processed conflicting macroeconomic and geopolitical signals. While dovish commentary from Fed Governor Chris Waller, who floated the possibility of a July interest rate cut citing tame inflation, provided a tailwind, this optimism was tempered by specific sectoral and geopolitical risks. Waller's stance notably contrasts with Fed Chair Powell's more cautious recent statements, shifting rate cut expectations slightly earlier, though September remains the market consensus according to CME Group data. Concurrently, a new report indicating the US may revoke technology waivers for semiconductor firms operating in China exerted direct pressure on the tech sector, with Nvidia (NVDA) falling approximately 1.1%. Geopolitical uncertainty also persists with President Trump's self-imposed two-week deadline on intervention in Iran; however, the market appears to be focusing on the positive aspect of this delay, which creates a window for diplomatic negotiations and contributed to a fall in oil prices.

Key Decisions for Investors

• Given the conflicting signals from Fed officials, investors should closely monitor upcoming inflation data and central bank commentary to gauge the true probability of a July rate cut versus the consensus September timeline.
• The two-week deadline for a decision on Iran introduces significant event risk; consider hedging against potential market volatility or reducing exposure to assets sensitive to Middle East conflicts.
• The targeted pressure on the semiconductor industry via potential waiver revocations warrants a review of positions in chip stocks like Nvidia and other companies with significant technological or supply chain exposure to China.
• The divergence between broad market optimism and sector-specific weakness suggests a selective approach, favoring positions supported by domestic demand over those exposed to escalating trade and geopolitical tensions.