U.S. Stocks Tread Water Amid Fed Decision and Israel-Iran Showdown

Wall Street opened with a whisper on Wednesday, as investors kept one eye on the Federal Reserve's looming interest rate verdict and the other on the explosive Israel-Iran conflict. The mood? Cautiously optimistic, but definitely on edge.

The Dow Jones Industrial Average kicked off the day hovering around 42,246, up a mere 30 points. The S&P 500, flirting with record highs, eked out a 0.01% gain, while the Nasdaq Composite was basically flat, also up just 0.01%. All three major indices were barely in the green, feeling the heavy weight of the Middle East drama on investor confidence.

Israel-Iran War Rattles Markets

Despite clinging to recent gains, the market lacked the guts to make a bold move. On Wednesday, Iran's Supreme Leader Ayatollah Ali Khamenei fired up the rhetoric, vowing that his country would never bow to Israel.

This fiery statement followed President Donald Trump's ultimatum that Iran must surrender unconditionally, fueling rumors that the U.S. might jump into the fray.

Khamenei shot back, warning that U.S. involvement would be "to its own detriment."

"The US entering in this matter [war] is 100% to its own detriment. The damage it will suffer will be far greater than any harm that Iran may encounter," he declared.

Against this tense backdrop, U.S. Treasury yields barely budged, with the 10-year note at 4.385% and the 2-year at 3.948%. Oil prices? They just kept climbing after Israel's surprise attack on Iran, which spiraled into more chaos, with Iran hitting back at Tel Aviv and other spots in Israel.

Meanwhile, the crypto market took a hit, with Bitcoin (BTC) tumbling from above $108,000 to below $105,000 as risk assets tanked.

Investors on Edge for Fed's Rate Decision

Beyond the Middle East fireworks, all eyes were on the Fed's policy decision set for later Wednesday.

Chair Jerome Powell, feeling the heat from Trump's recent rate cut demands, was due to speak at 2 p.m. ET. The word on the street? The central bank would likely keep rates steady, but the real drama was in the "dot plot," hinting at whether the Fed's previously teased two rate cuts were still in play.

Investors were also chewing over the latest weekly jobless claims data.

The Department of Labor dropped the numbers, showing claims hovering near an 8-month high, with 245,000 initial jobless claims filed last week, just shy of the expected 250,000 for the week ending June 7.