U.S. stocks were mixed at the open Wednesday morning as investors weighed escalating Middle East tensions, a pivotal Federal Reserve meeting later in the day, and a major U.S.-Japan industrial deal. With markets set to close tomorrow for the Juneteenth holiday, today’s trading session carries added weight.

The Dow Jones Industrial Average ticked up 5.49 points, or 0.01%, to 42,221.30 as of 9:34 AM ET. The S&P 500 slipped 1.16 points, or 0.02%, to 5,981.56, while the Nasdaq Composite fell 21.78 points, or 0.11%, to 19,499.30.

Crude oil prices climbed early, with the July futures contract for WTI crude rising 0.52% to $75.23 a barrel, extending gains spurred by geopolitical jitters. The contract has rallied amid concerns that Israeli airstrikes on Tehran and Iranian retaliation could disrupt regional energy flows.

Fed in Focus

Investor attention is fixed squarely on the Federal Reserve’s policy announcement later today. No rate change is expected, but traders are watching closely for any signals from Fed Chair Jerome Powell regarding future monetary policy direction.

“The Fed’s main message at the June meeting will be that it remains comfortably in wait-and-see mode,” wrote Aditya Bhave, economist at Bank of America. Bhave noted that while the Fed is not expected to cut rates in 2025, it may leave the door open for one later in the year.

The updated “dot plot” — the Fed’s projection of future interest rates — will be the centerpiece of the release. In March, the committee narrowly forecasted two rate cuts this year. If just two members change their outlook, that could fall to one. The decision comes amid a backdrop of easing inflation, softening labor market data, and ongoing White House pressure for looser monetary policy.

Goldman Sachs economist David Mericle highlighted that trade tensions have eased, inflation remains subdued, and macro data point to only limited softening. “Markets now expect the next rate cut in September,” Mericle wrote.

Labor and Housing Show Mixed Signals

Labor market data released this morning continued to paint a picture of resilience. Initial jobless claims dipped by 3,000 to 245,000 for the week ending June 14, aligning with forecasts. However, continuing claims edged up by 5,000 to 1.879 million, suggesting some friction in worker transitions.

Meanwhile, the housing sector showed signs of strain. U.S. building permits for June came in at 1.393 million units, below the 1.422 million forecast and down 2.3% from the prior month. High mortgage rates and weak builder sentiment continue to weigh on construction activity.

Nippon Steel Finalizes $14.9 Billion U.S. Steel Deal

In corporate news, Nippon Steel Corporation and United States Steel (NYSE: X) announced the closing of their $14.9 billion merger this morning. Under the agreement, U.S. Steel will retain its name and Pittsburgh headquarters and will continue to be “Mined, Melted, and Made in America,” according to the joint statement.

Nippon Steel plans to invest approximately $11 billion in U.S. Steel by 2028, including a major greenfield project. The companies have also entered into a National Security Agreement with the U.S. government, including provisions for domestic production, board oversight, and trade independence.

“This is a momentous day for our country, our communities, and the American steel industry,” said U.S. Steel CEO Dave Burritt. “Thanks to President Trump’s bold leadership, American workers secured the best possible deal”.

Middle East Escalation Drives Oil Prices Higher

Geopolitical developments are also influencing markets. Israeli strikes on Iran’s capital have intensified tensions, with retaliatory missile attacks reported from both sides. Brent crude jumped nearly 5% earlier this week, and WTI continues to climb. Analysts fear the conflict could widen and impact global energy supply chains.

Looking Ahead

Markets are closed Thursday in observance of Juneteenth, meaning investors will have to wait until Friday to fully digest the Fed’s decision and any developments from the Middle East.

For now, traders are staying cautious. With macro indicators diverging and geopolitics heating up, volatility may remain elevated through the rest of the week. WATCH: AI Create's Investing Opportunities in the Energy Sector