Finance

The Federal Reserve, under the leadership of new Chair Kevin Warsh, held its benchmark interest rate steady in the 3.5% to 3.75% range. Despite initial market hopes for multiple cuts in 2026, the central bank has shifted toward a more hawkish stance as annual inflation recently climbed back above 4%. Most officials now forecast only one rate reduction for the year, while a growing minority suggests that an additional hike might be necessary to stabilize prices.

A notable rotation has occurred within the technology sector as investors move away from major software 'hyperscalers' toward semiconductor manufacturers. While large firms face scrutiny over the return on their multi-billion dollar AI infrastructure investments, chipmakers like Nvidia and Micron continue to see surging valuations. The semiconductor index achieved its best quarterly performance on record, even as other segments of big tech experienced price pullbacks due to investment fatigue.

Crude oil prices have fallen sharply following a provisional peace deal between the United States and Iran to reopen the Strait of Hormuz. Brent crude futures recorded their worst quarterly performance since the pandemic, dropping nearly 38% to approximately $73 per barrel. This decline in energy costs has provided a relief valve for inflationary pressures that had previously weighed on the broader U.S. economy.