Wall Street Wavers As Geopolitical Tensions Flare, Trump Renews Attacks On Fed Chair Powell: This Week In Markets

Investor caution dominated Wall Street this week, as escalating tensions between Israel and Iran fueled fears of potential U.S. involvement. Plus, the Federal Reserve's decision to keep rates as is peeved President Donald Trump.The Federal Reserve kept interest rates steady at 4.25%-4.5% for the fourth consecutive meeting, reaffirming its cautious stance. Overall economic uncertainty has “diminished” since March, but the Fed warns that risks remain elevated. Policymakers maintain their median projection of two rate cuts in 2025, while trimming the 2026 outlook from three cuts to two — signaling a slightly more hawkish stance.Powell Defends The DecisionFederal Reserve Chair Jerome Powell defended the pause. He argues that while inflation has moderated, it is still too high to justify rate reductions. He cited new inflationary pressures stemming from tariffs tied to trade policy changes.The Fed now forecasts 2025 headline inflation at 3%, up from 2.7% in March. Meanwhile, GDP growth was revised downward to 1.4% in 2025, from a prior estimate of 1.7%.However, in a Friday interview with CNBC, Federal Reserve Governor Christopher Waller said the U.S. central bank could start cutting interest rates as early as July.Waller is a Trump appointee.Trump, meanwhile, took to calling Powell names in a social media post, labeling the Fed Chair "an American disgrace," arguing that the Fed’s inaction costs the U.S. billions in higher interest payments.Federal Housing Finance Agency Director Bill Pulte echoed the sentiment, calling for Powell's immediate resignation and blaming him for damaging the housing market. Homes are sitting on the market for weeks or even months while prices remain sky high and mortgage rates remain near 6.8%.Read Also: Why Powell Held Rates Steady, And What Trump’s Iran Comments Could Mean For MarketsEnergy SectorOil prices, which spiked in the prior week, steadied near $73 per barrel. Powell dismissed parallels with the 1970s oil shocks, stating that while further price spikes are possible, they are unlikely to generate persistent inflationary effects.Meanwhile, two major Congressional developments shaped market action. The Senate's draft tax bill proposed phasing out clean energy and solar tax credits earlier than anticipated, sparking a steep sell-off in renewables. First Solar Inc FSLR tumbled 13% on the week Enphase Energy Inc ENPH dropped 18%, and Sunrun RUN plunged 35%. On The Crypto Front: Coinbase Global Inc. COIN surged 27% on the week after the Senate passed a bill establishing a federal framework for dollar-pegged cryptocurrencies, known as stablecoins.The bill offers what its supporters argue is long-awaited regulatory clarity that could unleash capital from institutional investors. Critics, mostly Democrats, say it’s a conflict of interest for the Trump family.Now Read: This Rare Market Dynamic Preceded The Dot-Com Crash — It’s Back In 2025 Image created using artificial intelligence via Midjourney.