Stock market today: S&P 500, Nasdaq fall amid Fed rate uncertainty as Trump mulls Iran move

US stocks closed mixed Friday amid developments including a Fed governor suggesting potential July rate cuts and President Trump setting a two-week deadline for a decision on military action in Iran. The Dow Jones Industrial Average rose slightly, while the S&P 500 and Nasdaq Composite declined, with chip stocks particularly affected by reports of potential US restrictions on semiconductor manufacturers' access to American technology in China. Fed Governor Waller's dovish comments led to increased bets on a July rate cut, though the majority still anticipate a September cut, according to CME Group.

Analysis

US equity markets finished a shortened trading week with a mixed session, reflecting investor navigation of conflicting macroeconomic signals. The Dow Jones Industrial Average posted a marginal gain, while the S&P 500 and the tech-heavy Nasdaq Composite declined by 0.2% and 0.5% respectively. The Nasdaq's underperformance was driven by headwinds in the semiconductor sector, following a report that the US may revoke waivers allowing access to American technology in China, which directly contributed to a 1.1% decline in Nvidia (NVDA) shares. Offsetting these trade-related concerns were dovish comments from Fed Governor Chris Waller, who suggested a potential interest rate cut in July, citing tame inflation. While this prompted an uptick in market bets for a July cut, CME Group data indicates the consensus remains for a cut in September, highlighting a divergence from Fed Chair Powell's more cautious official stance. Concurrently, geopolitical tensions were temporarily eased as President Trump set a two-week deadline for a decision on military action in Iran, creating a window for diplomatic efforts and causing a slight retreat in oil prices.

Key Decisions for Investors

• Investors should closely monitor developments related to US policy on technology access in China, as the potential revocation of waivers poses a significant headwind for the semiconductor sector and could warrant a re-evaluation of exposure to names like Nvidia.
• The conflicting signals from Fed officials regarding the timing of rate cuts introduce policy uncertainty; watch upcoming inflation data and Fedspeak to gauge whether the probability of a July cut, though currently low, is increasing.
• The two-week deadline for a US decision on Iran creates a specific timeline for a potential spike in market volatility, suggesting it may be prudent to review portfolio hedges against geopolitical risk.