Rally Pauses Ahead of Fed Decision, Retail Sales
Published as of: June 16, 2026, 9:14 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® Index | 7,554.29 | +122.83 | +1.65% |
| Dow Jones Industrial Average® | 51,671.03 | +468.77 | +0.92% |
| Nasdaq Composite® | 26,683.94 | +795.09 | +3.07% |
| 10-year Treasury yield | 4.43% | -0.03 | -- |
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| Cboe Volatility Index® | 16.08 | -0.12 | -0.74% |
| WTI Crude Oil | $77.05 | -$3.50 | -4.64% |
| Bitcoin | $66,385 | -$190 | -0.29% |
(Tuesday market open) As the Federal Reserve's meeting starts and investors await tomorrow's rate decision, the key question is what new Chairman Kevin Warsh might say about the economy and rate policy. No rate change is expected, but the Fed's fresh economic and rate projections loom large. Stocks shed earlier gains before the open Tuesday despite sliding oil prices and another gain for memory chip makers, with pre-Fed trading potentially light and featureless.
In a quiet earnings period, geopolitical news may be the designated driver for markets this holiday-shortened week, aside from the Fed. The peace deal is expected to be signed Friday when U.S. markets are closed for Juneteenth, and there's also a Group of Seven (G7) meeting taking place.
On Monday, the Dow Jones Industrial Average rang up new record highs while chip strength drove the Nasdaq Composite to 3% gains. The rally was relatively broad, with seven of 11 S&P 500 sectors rising as market breath continued to improve. Data-wise, investors await May retail sales at 8:30 a.m. ET tomorrow, expected to show a 0.5% monthly gain. However, the report isn't adjusted for inflation, so a large increase doesn't necessarily mean consumers made more trips to the store. The retail sales control group data that feeds into gross domestic product (GDP) estimates is likely key.
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Three things to watch
- Earnings lull turns focus outward: Although the start of second quarter earnings season is still a month away, there are a handful of firms worth watching this week, including Kroger (KR), Accenture (ACN), and CarMax (KMX). Checking ahead, S&P 500 earnings growth is seen at 21.9% year over year in the second quarter, down from 28.8% in the first quarter and 23.2% for the calendar year, FactSet said. And for calendar year 2027, analysts see 16.2% year-over-year growth even as comparisons to year-ago levels get tougher. This goes a long way toward explaining the current record highs in stocks, and earnings strength looks extended well beyond the usual tech and communication services sectors, judging from FactSet's updated estimates. Energy is expected to lead the earnings growth pack this year with 66% annual gains, not a major surprise for anyone who's filled their tank recently. Info tech earnings are expected to climb nearly 45%, but materials earnings gains of nearly 40% and consumer discretionary gains of 14% offer evidence that the earnings surge goes beyond simply war and AI-related metrics.
- Volatility dips, but for how long? With investors pleased by news of Middle East progress, the Cboe Volatility Index (VIX) dipped below 17 on Monday, down from peaks of more than 23 in the middle of last week when chip stocks were running for cover and Middle East tensions were rising. At current VIX levels, the market prices in average daily moves of about 1%. That's down from 1.5% a week ago. The easing volatility might be short-lived, thanks in part to scheduled options expiration later this week. This would normally be a Friday event, but it's Thursday due to Friday's holiday closure. As options roll off, there could be some choppiness, especially Thursday, and also considering the recent pick-up in options trading among retail investors.
- As AI firms take on debt, investors yawn: On Monday, Nvidia (NVDA) might have surprised investors by announcing its first corporate bond sale in five years. The sale raised $25 billion, according to Bloomberg. This follows earlier bond offerings this year from Meta (META) and Alphabet (GOOGL), both of which sought cash to drive their AI spending, which is expected to total $700 billion industry-wide this year. Though Oracle (ORCL) shares got punished last week for the company's plans to raise more money, Nvidia shares simply seemed to shrug off similar news. Nvidia decided to raise cash despite having $62.5 billion in cash and short-term investments and free cash flow of $49 billion in the first quarter of its fiscal 2027. With so much demand in the AI markets, investors don't seem ready to punish Nvidia for issuing debt rather than simply tapping its balance sheet. Nvidia holds its annual stockholders meeting a week from tomorrow, perhaps offering investors a chance to tune in for explanation of Nvidia's choice here.
On the move
- SpaceX (SPCX) climbed 6% ahead of the open on its third day as a publicly traded company, jumping above $200 per share.
- Chip and chip infrastructure stocks—which resumed their ascent Monday—climbed again Tuesday, led again by memory chip names like Western Digital (WDC) and Seagate Tech (STX), up 9% and 7%, respectively, in the early going. Micron (MU), a memory chip name that reports next week, rose 3%.
- Qualcomm (QCOM) climbed nearly 5% before the open after The Information reported Qualcomm is in discussions to acquire AI chip design startup Tenstorrent for between $8 billion and $10 billion.
- Roku (ROKU) fell 2% ahead of the open after climbing sharply Monday on news that Fox (FOX) plans to buy Roku for approximately $22 billion. Shares of Fox tumbled 15% Monday after investors learned of the plan to buy the streaming device maker.
- Tesla (TSLA) fell almost 1% early today despite a positive analyst note from Goldman Sachs, which said it expects Tesla's second quarter vehicle deliveries to total 420,000, up from the prior forecast of 405,000, based on strength in Europe and China. Tesla is expected to report deliveries early next month.
- Defense-related stocks including Lockheed Martin (LMT) and Northrop Grumman (NOC) fell Monday amid ideas that the Middle East conflict might calm.
- Boeing (BA) rose moderately Monday, lifted by news that it delivered 60 aircraft in May, up from 45 a year earlier.
- Though market breadth has improved, the biggest stocks continue to hold the wheel. As an example, the S&P 500 Index's 1.65% gain Monday came as 264 of 500 components advanced, only a little over half.
- As analysts had expected, the Bank of Japan (BoJ) raised its policy rate by 25 basis points earlier today to 1% as it tries to clip inflation and a weak yen. The BoJ also made clear future hikes could be necessary as it sees a "steady pass-through of costs in business-to-business prices," Reuters reported.
- Some data filtered in this morning including a 15% monthly decline in May housing starts to well below consensus views. Building permits fell 0.7%, but slightly topped analysts' expectations. This followed a smaller rise in May industrial production than expected at just 0.1%, though April's huge gain might have pulled some demand forward.
- U.S. inflation was also in focus today as May import prices rose 1.9%, though just 0.8% subtracting oil. That was still up from 0.6% in April. Export prices rose by 1.3% in May, down from 3.5% in April. Treasury yields remained lower after this news and the light housing data.
More insights from Schwab
Warsh watch: The question at tomorrow's Fed meeting isn't the decision itself, since the market projects no chance of a rate move. Instead, it's how Warsh decides to communicate and any changes he may plan for getting across the Fed's policy guidance, said Kevin Gordon, head of macro research and strategy at SCFR, in his new Week Ahead video.
Did you mean to imply? In Schwab's new technical analysis article, learn all about implied volatility and percentile rankings and how they can help identify whether changes in options pricing are normal or unusual.
REITS primer: Real estate investment trusts (REIT) have become increasingly popular as investors look for diversification, potential inflation protection, and income generations. However, they also have drawbacks. Schwab's latest article looks at how REITS can fit into an investing portfolio.
The shifting game of golf: Schwab's new Invested in the Game podcast features golf course developer Michael Keiser, Jr., who shares his upbringing around golf and his path into his profession. He also reflects on generational shifts in how people play, focusing on modern destination golf, and how it can foster human connections.
Chart of the day
Data sources: Cboe. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The benchmark 10-year Treasury note yield (TNX:CGI—candlesticks) trades at just below 4.47%, down from peaks above 4.54% last week but not by much and still above the 50-day moving average (blue line). Yields remain near the high-end of this year's range despite growing hopes that a peace deal can calm the oil market. Lower oil prices are good for the inflation outlook, but many of the factors that have been holding up long-term Treasuries are still present, including budget concerns, inflation uncertainty and its impact on the term premium, and the level of global bond yields.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
June 17: FOMC rate decision, May retail sales and pending home sales, and expected earnings from CarMax (KMX).
June 18: Expected earnings from Accenture (ACN) and Kroger (KR).
June 19: U.S. markets closed for Juneteenth holiday.
June 22: No major earnings or data expected.
June 23: Expected earnings from Carnival (CCL) and FedEx (FDX).