Dow Jones edges higher ahead of Fed interest rate decision, escalating West Asia tensions

Wall Street’s main indices opened slightly higher on Wednesday as investors awaited the Federal Reserve’s key interest rate decision, while escalating conflict between Israel and Iran continued to fuel global uncertainty. The Dow Jones Industrial Average (.DJI) rose 20.2 points, or 0.05%, to open at 42,236.03. The S&P 500 (.SPX) gained 5.2 points, or 0.09%, to 5,987.93, and the Nasdaq Composite (.IXIC) added 5.8 points, or 0.03%, to begin the day at 19,526.92.

The Federal Reserve is widely expected to keep its benchmark interest rate unchanged following Wednesday’s policy meeting. The rate has remained steady since December, with officials maintaining a cautious stance amid ongoing economic and geopolitical uncertainties. Since taking office, President Trump has pushed for rate cuts, arguing they would boost growth—calls that have intensified in recent weeks after new data showed job growth slowed in May. However, Fed Chair Jerome Powell and other officials have signaled a wait-and-see approach, pointing to potential risks tied to Trump’s tariffs and broader fiscal strategy.

Meanwhile, tensions in West Asia reached a boiling point as Iran’s Supreme Leader Ayatollah Ali Khamenei declared that “the battle begins” in a forceful message directed at Israel’s government. His comments came hours after U.S. President Donald Trump demanded Iran’s “unconditional surrender” and just after Iran launched two rounds of ballistic missiles at Israel early Wednesday. Khamenei, in a statement posted on X, vowed to show “no mercy” to what he called the “terrorist Zionist regime.” With geopolitical risks rising and monetary policy in focus, markets are bracing for heightened volatility in the days ahead.