U.S. equities opened the week with a mixed tone on Monday as investors turned their attention toward the Federal Reserve’s midweek policy meeting. With no rate cut expected during this session, market watchers instead focused on signals about possible easing later this year.
The Dow Jones Industrial Average closed modestly higher, gaining 96.64 points (+0.23%) to settle at 41,414. In contrast, the S&P 500 slipped by 12.9 points (-0.23%) to 5,673, and the Nasdaq Composite lost 54.21 points (-0.30%), ending at 17,923.
Market Anticipates June, October, December Rate Cuts
According to Jeffrey Roach, Chief Economist at LPL Financial, investors should watch the language in the Fed’s Wednesday statement for hints of future policy easing. “The Fed is unlikely to cut rates in May, but the groundwork is being laid,” Roach said. He expects the central bank to reduce rates at least three times in 2025 — potentially in June, October, and December — if current inflation and labor trends continue.
The PCE index, the Fed’s preferred inflation gauge, currently stands at 2.39%, still above the 2% target but showing signs of softening. Inflation has now declined for two consecutive months, primarily due to cooling consumer demand and easing energy prices.
Oil and Tariffs in Focus
Adding to the optimism was OPEC+’s announcement of a 411,000 barrel per day output hike starting June 1, which contributed to a dip in oil prices — a welcome development in the inflation battle.
However, geopolitical uncertainty returned after President Donald Trump proposed a 100% tariff on foreign-made films, calling them a national security risk. He accused foreign governments of luring U.S. studios overseas with incentives, a move he vowed to counter.
Berkshire Hathaway Drops on Buffett Retirement
One of the biggest stories of the day came from Berkshire Hathaway, which saw its stock tumble 4.33% after news broke that Warren Buffett would retire as CEO. While he will remain as company president, the leadership transition triggered investor anxiety about the conglomerate’s future direction.
With markets increasingly sensitive to both monetary and fiscal developments, the next major catalysts will be the Fed’s tone on Wednesday and upcoming data on jobs and wage growth, which could firm up expectations for the first rate cut.
