Wall Street stocks finished mixed on Tuesday after Monday's record-setting rally, with the Dow Jones Industrial Average rising 0.8% even as the S&P 500 fell 0.3% and the Nasdaq Composite slipped 0.7%. Traders were still digesting the sudden shift in oil-market expectations tied to the Strait of Hormuz, while they waited for the Federal Reserve's next move.
The Dow's advance followed an all-time closing high on Monday, but the broader market lost momentum as investors recalibrated around the Fed's June meeting, which began on Tuesday and was set to end with a closely watched rate decision on Wednesday. Kevin Warsh was set to lead his first meeting as chair, and nearly all traders were expecting the Fed to hold rates steady at 3.5% to 3.75%, even as the market priced in at least one quarter-point hike by year-end.
Rick Rieder said the central bank should move toward lower rates. The BlackRock chief investment officer of fixed income said interest-rate-sensitive areas such as housing were already feeling the pressure and argued that the economy should see some moderation as a fiscal tailwind fades. That view sat in sharp contrast to the hotter tone of May's consumer price index, which showed prices rising at their fastest year-on-year pace since 2023.
The oil backdrop only added to the unease. The US-Iran agreement promised Friday's reopening of the Strait of Hormuz, and US officials said commercial traffic would be allowed through the waterway without tolls. But hopes for a quick return of oil flows had already started to fade, with warnings that reopening would not be easy and that shipments could take months to ramp up. In practical terms, that means traffic may reopen on paper before volumes normalize in the real world.
Elsewhere, SpaceX shares jumped further and pointed to a third day of post-IPO gains, opening higher on Tuesday and briefly lifting the company past Microsoft to become the world's fourth-largest company before it slipped back to fifth. It had already overtaken Amazon in market value, a sign of how quickly investors have embraced the stock even as the company reported a net loss of $4.94 billion in 2025. The contrast between that surge and the caution around the Fed left Wall Street trading between appetite for growth and a more careful read on rates, inflation and energy supply. Wednesday's decision should make that balance clearer, but not simpler.
