Will The Fed Kill The S&P 500's Relief Rally?
Key takeaways
- Trefis Team Tue, June 16, 2026 at 4:04 PM GMT+7 5 min read ^GSPC CL=F SPCX SPY MSFT The S&P 500 closed Monday at 7,554.29, up 1.65%, as the Nasdaq surged 3.1%.
- May CPI printed at 4.2% year-over-year, and producer prices on goods and services rose even faster at 6.5%.
- The formal signing ceremony is scheduled for Switzerland on June 19, two days after the FOMC decision lands.
Will The Fed Kill The S&P 500's Relief Rally? Trefis Team Tue, June 16, 2026 at 4:04 PM GMT+7 5 min read ^GSPC CL=F SPCX SPY MSFT The S&P 500 closed Monday at 7,554.29, up 1.65%, as the Nasdaq surged 3.1%. This sharp rally appeared closely tied to geopolitical developments. On Sunday, June 14, President Trump announced the US-Iran peace deal via Truth Social, simultaneously authorizing the toll-free reopening of the Strait of Hormuz and removing the naval blockade. Consequently, WTI crude dropped roughly 5% to around $80, while Brent fell to $83, their lowest levels in months. The S&P now walks into one of the most consequential Fed weeks in years with oil retreating, inflation still elevated, and a new Fed Chair at the podium for the first time.
May CPI printed at 4.2% year-over-year, and producer prices on goods and services rose even faster at 6.5%. The core of this inflation problem was energy. One analyst noted that crude falling to $80 is "a strong signal, given that this is an FOMC week, that we don t need to raise rates, and that the price pressure should alleviate relatively quickly."
But here is the catch: the deal is unsigned. The formal signing ceremony is scheduled for Switzerland on June 19, two days after the FOMC decision lands. Infrastructure damage to downstream facilities and LNG export capacity, including those at Ras Laffan, means a return to business as usual will take time even under the most optimistic scenarios. The Fed is unlikely to fully price in a supply shock reversal until the infrastructure recovery is firmly underway.