Finance

In the first meeting under Chair Kevin Warsh, the Federal Reserve maintained current interest rates but shifted to a more hawkish stance, with quarterly projections indicating a likely quarter-point hike by September or October 2026. This policy update has led to increased volatility in the bond market, with the policy-sensitive 2-year Treasury yield jumping to approximately 4.19% following the announcement.

Energy markets saw a notable decline as a tentative interim agreement between the U.S. and Iran took effect, leading to the anticipated reopening of the Strait of Hormuz. Brent crude futures fell below the $80-a-barrel threshold, easing immediate inflation concerns and prompting a rotation from energy stocks into cyclical sectors like financials and industrials.

Despite broader macroeconomic uncertainty, the artificial intelligence sector remains a primary driver of market activity, with big tech firms projected to spend over $700 billion on AI-related capital expenditures in 2026. Recent high-profile partnerships, such as the Intel and Apple chip design collaboration, have further bolstered investor confidence in long-term AI productivity gains.