WS #13010

The Federal Reserve held rates steady at 3.50%-3.75% as expected, but the vote was fractured (9-3) with three regional presidents dissenting in favor of a hike, signaling growing hawkish pressure. Chair Warsh's press conference emphasized a data-dependent approach, looking beyond PCE, and committed to more frequent press conferences. Markets interpreted the lack of forward guidance as dovish, with the dollar falling and bond traders lowering rate hike expectations. However, the hawkish dissent and Warsh's comment that central bankers are 'more inclined to tighten' when inflation rises keeps a September hike on the table (69% probability per CME). Geopolitical tensions with Iran escalated sharply: Trump stated the US will 'hit them very hard' after a rocket attack from Iran and a drone strike on a US-owned platform off Egypt. Oil prices spiked 7-8% (Brent to $90.90, WTI to $84.87). Energy stocks rose, while airlines and consumer discretionary are likely to face headwinds. Separately, Apple briefly touched a $5 trillion market cap, driven by a narrative shift away from hyperscaler AI capex toward capital-efficient growth. SpaceX is reportedly looking to acquire spectrum to compete with wireless carriers, sending AT&T and Verizon down ~4%. Key earnings events: META and MSFT report after the close today; AMZN and AAPL report tomorrow. The options market predicts a ~3-4% move in Apple's stock. VF Corp tumbled 18% on a wider-than-expected loss. New Oriental jumped on earnings beat. Boeing shares rose 4% on better-than-expected free cash flow.