Here's a fun thing about markets: sometimes they decide to just ignore the obvious problem. On Tuesday, U.S. stocks decided to extend their rebound, climbing away from four-month lows even as oil prices shot higher again. It seems investors are taking a deep breath, reassessing last week's panic over stagflation, and turning their attention to the main event: the Federal Reserve's rate decision on Wednesday.
In the middle of all this, Micron Technology (MU) stock was having its own party, rallying to record highs ahead of its earnings report Wednesday. The options market was busy pricing in just how big a move traders expect.
Meanwhile, in a different kind of market—the geopolitical one—President Donald Trump made a notable declaration. After most NATO allies reportedly declined to join a U.S. military operation against Iran, Trump stated the United States "does not need the help of anyone." He wrote that America had already "decimated Iran's Military" — their navy, air force, anti-aircraft systems, and leadership "at virtually every level."
Back in the commodity pits, West Texas Intermediate crude climbed 1.5% to $94.90 a barrel. Brent crude crossed back above $101, neatly reversing Monday's brief relief rally in energy markets. The catalyst? Overnight, Iran escalated attacks on energy infrastructure in the Persian Gulf. Adding to the tension, Israel reported killing Iran's security chief—a stark reminder that this conflict is far from over.
All of this creates a messy backdrop for the Federal Reserve, which kicked off its two-day policy meeting Tuesday. No one expects a change to the current 3.75% fed funds rate on Wednesday. The real action will be in the updated Summary of Economic Projections—the famous "dot plot." Policymakers are now tasked with modeling the economic impact of these surging energy prices on both growth and inflation. It's a tricky puzzle.
The market's current bet? Just one 25-basis-point rate cut, and no earlier than December. Reflecting this cautious calm, the 10-year U.S. Treasury yield edged down nearly 2 basis points to 4.20%. The 30-year yield settled at 4.85%.
By midday in New York, the mood was cautiously optimistic. The S&P 500 rose 0.4% to 6,722 points, while the Nasdaq 100 slightly outperformed the broader market.














