U.S. Stock Indexes Fall as Fed's Warsh Holds First Meeting; BoJ to Hike Rates to 1% This Week

This week, the U.S. stock market faces key policy decisions as Federal Reserve Chair Kevin Warsh presides over his first rate-setting meeting. The S&P 500 has retreated over 2% from its June 2 peak, while the Nasdaq has fallen roughly 4.5% from the same record high. Market consensus expects the Fed to hold rates steady on Wednesday, but investors will closely monitor Warsh's communications regarding future policy direction and his plans to reduce the Fed's $6.7 trillion balance sheet.

The Bank of Japan is widely expected to raise its benchmark rate by 25 basis points on Tuesday, pushing Japan's key rate to 1% for the first time since 1995, though the impact on the yen may be limited. The G7 summit in Evian-les-Bains this week will focus on the Middle East and Ukraine, with representatives from Saudi Arabia, the UAE, Qatar, Egypt, and Ukrainian President Zelenskyy attending alongside member nations.