Stock indices recorded a mixed performance on Monday as traders anticipated a key announcement from the Federal Reserve. The Dow Jones closed at 41,414, reflecting an increase of 96.64 points or 0.23%. In contrast, the S&P 500 declined by 12.9 points or 0.23% to reach 5,673, while the Nasdaq fell by 54.21 points or 0.30%, settling at 17,923.
Markets do not expect much from this week’s Federal Reserve meeting, though they may anticipate positive developments for June.
LPL Financial chief economist Jeffrey Roach suggests that the Federal Reserve may utilize this week’s meeting to signal upcoming rate cuts to investors. Based on a mix of labor market figures and inflation data, Roach believes that rate reductions could be scheduled for June, October, and December.
Inflation Holds Steady as Fed Rate Cuts Appear Likely
Although inflation remains above the Federal Reserve’s 2% target—currently measured at 2.39%—it has declined for two consecutive months. Reduced demand, attributed to ongoing concerns about inflationary pressures, likely drives the cooling of inflation. This trend has persisted despite apprehensions that U.S. tariffs, particularly those targeting China, could indirectly elevate consumer prices.
OPEC+ reported encouraging developments regarding inflation, revealing plans to increase oil production by 411,000 barrels starting June 1. This announcement led to a significant decrease in oil prices, which later stabilized. As oil prices influence inflation, their reduction will positively impact consumer costs.
In trade policy developments, new proposals from President Donald Trump to impose 100% tariffs on films produced abroad unsettled markets. On Monday, May 5, the President accused foreign nations of allegedly providing incentives aimed at luring film studios away from the United States, which he labeled a “National Security threat.”
The stock of multinational conglomerate Berkshire Hathaway experienced a significant decline of 4.33% following the announcement that its founder, Warren Buffett, would step down as CEO, although he would continue to serve as the company’s president.
