US stock markets fall amid Iran strikes and potential higher interest rates | US news
U.S. stock markets fell on Wednesday as the United States continued its attacks on Iran and the Fed flagged concerns that it could lead to higher interest rates.
Donald Trump’s statement regarding the Iran-US ceasefire at the NATO summit in Ankara Oil prices rose sharply on Wednesday. Global benchmark Brent crude oil increased by more than 5 percent, reaching $80 per barrel. U.S. stocks fell, with the Dow index down 1.09%, or 500 points, at the close on Wednesday afternoon. The S&P 500 posted a small loss, while the tech-heavy Nasdaq rose slightly. Global stocks fell earlier in the day; Britain’s FTSE 100 fell 1% and Japan’s Nikkei fell 2.1%.
At the NATO summit in Türkiye, Trump criticized the Iranian government, calling them “sick people” and said he was “very uncomfortable” with the country’s military alliance with Spain.
Trump said, “In my opinion, it’s over now,” but said U.S. negotiators want to continue negotiations.
The economic effects of the Iran war reverberated around the world. The International Monetary Fund on Wednesday cut its global economic growth forecast to 3% from 3.1% in April, citing conflicts in the Middle East and subdued AI spending. Global growth averaged 3.5% in 2024 and 2025.
While oil prices fell sharply during the ceasefire, gas prices remained high. Gas prices at the pump in the US average $3.79 per gallon; That’s $0.65 per gallon higher than a year ago. AAA. US diesel futures also rose 13% on Wednesday after Russia introduced diesel exports Forbidden Following a drone attack that hit key Ukrainian refineries.
In May, the U.S. annual inflation rate rose to 4.2%, a three-year high and more than double the Federal Reserve’s 2% inflation target.
Minutes of the last Fed board meeting, released two weeks later, showed little discussion about lowering interest rates in the near future, although there was some disagreement about when inflation would drop. This is a change from previous Fed meetings, when some officials suggested inflation would be temporary.
According to the minutes, some officials believed that the current interest rate, which has been set as a target range between 3.5 percent and 3.75 percent, could be maintained or even reduced if inflation falls, while others stated that interest rates should be increased before the end of the year to cope with rising inflation.
“Both total and core inflation were higher than their levels a year ago, a development that staff attributed to a variety of factors, including the reflection of past tariff increases, higher energy and input costs resulting from conflict in the Middle East, and an increase in demand related to the construction of artificial intelligence,” the minutes said.
The rate hike is bound to upset Trump, who has demanded the Fed lower interest rates despite high inflation. The tension will be difficult to overcome for Fed chairman Kevin Warsh, who was enthusiastically nominated by Trump in the spring and took office in May.
