Stocks Trim Drop as Iran Talks Fuel Mideast Hopes: Markets Wrap

(Bloomberg) -- A fresh bout of instability gripped stocks amid talks aimed at de-escalating the conflict in the Middle East and as a $6.5 trillion expiration of options threatened to trigger sudden price swings. Treasuries rose as Federal Reserve Governor Christopher Waller said rates could drop as early as July. 

The S&P 500 trimmed losses as European officials emerged from talks with Iran sounding hopeful that diplomacy will continue a day after President Donald Trump signaled he would give negotiations a chance before deciding whether to intervene militarily. Chipmakers pared most of a slide triggered by a Wall Street Journal report that the US may revoke waivers for allies with semiconductor plants in China. Shorter-dated bonds outperformed. 

Waller reiterated his view that the inflation hit from tariffs is likely to be short-lived. His comments on CNBC followed this week’s Fed decision to keep rates on hold for the fourth straight meeting. Meantime, Richmond Fed President Thomas Barkin told Reuters there’s no rush to cut rates amid tariff risks to inflation as the job market holds up.

Money markets slightly increased their bets on a September Fed reduction, with an October move remaining fully priced in. Fed officials left interest rates unchanged Wednesday, as they have all year, as they seek to learn more about how President Donald Trump’s policies will affect the economy. 

“The market is dealing with a lot presently, from geopolitical tensions, tariff uncertainty and questions about the Federal Reserve’s next move,” said Brian Buetel at UBS Wealth Management. “While there are different risks on the horizon, stocks are a forward-looking barometer of economic growth, which we believe will hold up this year.”

Corporate Highlights:

• Meta Platforms Inc. held discussions with artificial intelligence search startup Perplexity AI Inc. about a possible takeover before moving ahead with a multibillion-dollar investment in Scale AI, according to people familiar with the matter.
• Tesla Inc. is set to open its first showrooms in India in July, people familiar with the discussions said, kicking off formal operations in the world’s third-biggest automobile market as the Elon Musk-led firm hunts for growth amid falling sales in Europe and China.
• Musk’s artificial intelligence startup xAI Corp. offered investors sweeter pricing on its $5 billion debt offering Friday, as Morgan Stanley wraps up commitments for the deal.
• Kroger Co.’s sales surpassed expectations during the latest quarter, a sign that consumers are still spending on groceries and other essentials despite economic turbulence.
• Darden Restaurants Inc. is considering “strategic alternatives” for its Bahama Breeze chain, Chief Executive Officer Rick Cardenas said.
• Aflac Inc. said a recent cybersecurity breach could have given intruders unauthorized access to customers’ personal information, including Social Security numbers, as well as health and claims data.
• QXO Inc. won’t raise its $5 billion offer for building products distributor GMS Inc. after Home Depot Inc. reportedly made its own bid.
• CarMax Inc. reported comparable sales and earnings per share that beat consensus estimates.
• Accenture Plc reported results and gave an outlook. Analysts highlighted bookings as a weak spot of the print.
• SoftBank Group Corp. founder Masayoshi Son is seeking to team up with Taiwan Semiconductor Manufacturing Co. to realize what could be his biggest bet yet — a trillion-dollar industrial complex in Arizona to build robots and artificial intelligence.
• Temu’s sales decline in the US is deepening as the online marketplace drastically cuts spending on advertising targeting American consumers, signaling a shift in focus after President Donald Trump’s tariff barrage.

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 2:24 p.m. New York time
• The Nasdaq 100 fell 0.2%
• The Dow Jones Industrial Average rose 0.1%
• The MSCI World Index was little changed
• Bloomberg Magnificent 7 Total Return Index fell 0.6%
• Philadelphia Stock Exchange Semiconductor Index fell 0.7%
• The Russell 2000 Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.4% to $1.1536
• The British pound was little changed at $1.3471
• The Japanese yen fell 0.3% to 145.88 per dollar

Cryptocurrencies

• Bitcoin fell 1% to $103,220.53
• Ether fell 3.5% to $2,420.25

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.37%
• Germany’s 10-year yield was little changed at 2.52%
• Britain’s 10-year yield was little changed at 4.54%

Commodities

• West Texas Intermediate crude fell 0.2% to $74.99 a barrel
• Spot gold fell 0.2% to $3,365.60 an ounce

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