The Dow Jones and S&P 500 indices have performed well this year and are now hovering near record highs. They have rallied 13% and 17%, respectively, from their March lows, driven by the artificial intelligence boom and strong ETF inflows. 

This article explores the key catalysts likely to move the markets during this shortened trading week, as US markets will be closed on Friday in observance of the Juneteenth holiday.

Dow Jones and S&P 500 Index To React to Fed Decision

The Federal Open Market Committee (FOMC) will conclude its two-day meeting on Wednesday. The bank is expected to leave interest rates unchanged between 3.50% and 3.75%. 

This will be an important meeting because it will be the first one by Kevin Warsh, who became chair in May. As such, investors and economists will pay close attention to his statement.

The rate decision comes at a time when the US is experiencing high inflation, with the headline consumer and producer inflation jumping to 4.2% and 6.5% in May this year. Another report showed that the US labor market was strong, with the economy adding over 172k jobs in May. 

Signs that the bank is considering cutting interest rates will be bullish for the S&P 500, Dow Jones, and other US indices. 

US and Iran Memorandum of Understanding

There are signs that market participants have ignored the ongoing US-Iran crisis in the past few months. Indeed, the Dow Jones and S&P 500 indices have jumped to their all-time highs during the fragile ceasefire. 

President Donald Trump has said that the US and Iran will launch a memorandum of understanding on reopening the Strait of Hormuz today. If this happens, it means that crude oil prices will continue falling, potentially triggering a risk-on sentiment. 

However, there is a risk that the deal will not be signed today after Israel launched strikes in Southern Lebanon. Iran has insisted that any deal it signs will have to include Lebanon.

SpaceX IPO Hype Starts to Fade

The Dow Jones and S&P 500 indices jumped ahead of the SpaceX IPO, which happened on Friday. SpaceX (NASDAQ:SPCX) jumped by 19% in its first trading day, bringing its market capitalization to over $2.2 trillion. 

Wall Street traders will still continue watching the company and how it performs this week. A continued rally may lead to more stock market gains as investors anticipate more IPOs. Such a move will benefit key investment banks like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). 

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