Staring down an escalating war, soaring oil prices, and inflation that refuses to quit, the Federal Reserve kept interest rates parked between 3.5% and 3.75%.

This is the Fed’s second consecutive call to hold rates steady, a decision that was widely anticipated amid growing concerns over how the Iran war could ripple through the US economy.

“The implications of events in the Middle East for the US economy are uncertain,” chair Jerome Powell said during today’s press conference. “In the near term, higher energy prices will push up overall inflation. But it is too soon to know the scope and duration of the potential effects on the economy.”

Oil shocks generally don’t rattle the Fed, which tends to look past them as temporary disruptions. But the bigger-picture concern is how long inflation has outpaced the Fed’s 2% goal. As Powell pointed out, “It’s been five years now of inflation above target.”

The Fed’s new balancing act

This Fed decision, like the last one, was not unanimous. Among the twelve voting FOMC members, only Stephen Miran (appointed by President Trump in 2025) pushed for a quarter-point cut. As for what lies ahead, the Fed’s Summary of Economic Projections (aka the Dot Plot) shows central bankers expect one quarter-point rate cut for the rest of the year, followed by two quarter-point cuts in 2027—unchanged from the last Dot Plot in December.

Still, it’s worth keeping in mind that many of the economic reports the Fed relies on for its decision-making were released before the Iran conflict began. As a result, the war’s impact has yet to fully show up in the data. But even pre-Iran, the state of the economy had already raised some red flags.

Just this morning the Producer Price Index measuring US wholesale inflation in February unexpectedly rose by 3.4% annually, the highest spike since February 2015. Core PPI, which excludes food, energy, and trade services, rose 3.9%. Both numbers suggest that business costs are rising, which may be passed along to consumers via higher prices.

A murky future

The Fed’s own economic projections were a mixed bag. Although their unemployment forecast for 2026 remained unchanged at 4.4%, officials now expect slightly healthier economic growth, with GDP expected to climb 2.4% this year versus a 2.3% forecast in December. Meanwhile, their outlook on headline inflation rose from 2.4% to 2.7%, and core inflation forecasts also ticked up to 2.7%.

Long story short: The Fed sees economic growth holding up, unemployment staying steady, but inflation inching higher.

Meanwhile, Fed drama is still afoot. This was Powell’s second-to-last meeting as chair of the Federal Reserve before his term ends on May 15. Although President Trump tapped Kevin Warsh to fill this role, Republican Senator Thom Tillis has vowed to block that nomination until the Justice Department calls off its criminal investigation into Powell—a move widely seen as a brazen pressure campaign.

So what happens if Warsh’s confirmation remains in limbo by the Fed’s next meeting on June 16 and 17? Powell said in his press conference that the law states he would stay on as chair pro tem until a successor is installed.

That decision, much like today’s call to keep rates steady, is sure to garner a strong reaction from the White House.—JD

🟢 What’s up

• Macy’s rose 4.67% as strong fiscal Q4 earnings outweighed a cautious full-year outlook.
• Cloudflare rallied 6.6% on reports that the web infrastructure provider may partner with Coinbase to issue a stablecoin for AI agents.
• Chinese logistics company ZTO Express climbed 7.43% following better-than-expected quarterly results.
• Lululemon edged up 3.84% despite weak 2026 guidance, supported by a solid Q4 earnings beat.
• Optical components manufacturers Lumentum popped 7.89% and Coherent jumped 4.65%, driven by upbeat industry conference commentary overshadowing mixed signals from Nvidia.

What’s down

• Starbucks slipped 5.03% after RBC Capital downgraded the stock, pointing to rising labor costs and heavier future investments.
• Electronics company Jabil fell 1.46% despite raising its full-year profit and revenue forecasts.
• Gemini Space Station lost 16.17% after Citi downgraded the stock to Sell and cut its price target by 50%, citing regulatory delays and profitability concerns.
• General Mills fell 2.99% as the consumer goods company continues to struggle to turn things around.
• The Trade Desk dropped 6.06% as analyst downgrades followed reports of clients being steered away from its platform.
• Identity security platform SailPoint declined 15.23% on weaker-than-expected guidance for both the upcoming quarter and FY2027.
• Rocket Lab slid 11.59% after announcing plans to raise up to $1 billion through a share sale.

Exactly one decade ago, on March 18, 2016, Disney’s stock opened at $99.98. Today, the stock opened at…$99.84.

Shares have gone nowhere fast for a while now, but a new day is dawning in the Magic Kingdom after outgoing CEO Bob Iger handed over the keys to the House of Mouse at Disney’s annual shareholder meeting this morning. New CEO Josh D’Amaro, former chairman of Disney’s experiences division, outlined his vision for the company in his first memo to staff today, highlighting three key areas of focus: great storytelling, embracing technology, and aligning the entire company as “One Disney.”

That sounds lovely, but shareholders are hoping D’Amaro has some actual, concrete plans to light a fire under the stock. The new CEO has plenty on his plate:

• Linear TV is dying, threatening Disney assets like ABC, ESPN, and FX—though recent earnings prove that the company’s streaming efforts are making some headway.
• Theme parks and cruise lines were also a bright spot for earnings, but the cost of expanding them is eating into profits.
• Expensive deals for the broadcasting rights to sports add a burden to the bottom line, and several years of hit-or-miss movies have made box office revenue unreliable.

Bob Iger casts a long shadow, and the pressure is on D’Amaro to prove he’s got what it takes to lead Disney to a “happily ever after.”—MR

Despite the ongoing war in Iran, defense stocks have largely stalled, with much of the expected upside priced in long ago—with President Trump’s election victory.

But one stock is rewriting that narrative: Yesterday, Swarmer soared 520% on its Nasdaq debut, and added another 77.42% today.

As the name suggests, the company specializes in coordinating drone swarms—creating networks of autonomous drones that communicate with each other in real time, share data, and make decentralized decisions. Swarmer doesn’t actually manufacture the drones, but instead builds the AI software that powers them.

For a stock flying this high, you’d expect strong fundamentals. But the company generated just $309,920 in revenue last year, down 6% year over year, and posted an $8.5 million loss, more than four times the prior year’s deficit.

So why is the stock rising?

1. Low revenue = high leverage: Founded in 2023 and valued at $380 million, Swarmer’s small revenue base means even a single contract win could materially move the stock, and that’s exactly what investors are betting on.
2. The business itself: Swarmer’s drones are cheap but effective. One pilot can control up to 690 drones at once, and, compared to missiles that can cost $4 million each, drones can be deployed for closer to $40,000 a pop. And it’s not just theoretical: Swarmer’s drone swarms have already been deployed in Ukraine, and in 100,000 real-world combat missions since April 2024.
3. Timing: A US ban on Chinese drone manufacturer DJI late last year opened the door for domestic players, and the ongoing Iran conflict is accelerating demand—putting Swarmer at the intersection of AI and defense; two of the market’s hottest themes.

How to play it

While Swarmer has been gaining altitude, it’s not the only name in the game: Karman, a drone manufacturer, has also been making headlines. But after surging 180% over the past year and trading at 150x forward earnings (up from 90x a year ago), much of its upside may already be priced in. Meanwhile, AeroVironment has faced similar skepticism, with a recent earnings miss sending the stock down 18.69% over the past month.

Going forward, investors should watch whether Swarmer stabilizes, which could signal real demand versus speculation. At the same time, policy tailwinds will be key: the White House is expected to request $50 billion in additional war funding soon, which, if granted, could further boost the drone sector.—SY

• March Madness is nearly here, but tournament losers won’t just bust your bracket—studies show they’ll hurt your portfolio, too.
• The South Korean stock market fell 18% when the Iran war began. It’s now up 40% this year as traders bounce back.
• Meta Platforms continues to cut back on its metaverse aspirations, shuttering its Horizon Worlds VR social platform.
• Crypto exchange Kraken has paused its IPO plans until markets get a little less volatile.
• Grocery stores have found themselves on the frontlines of America’s affordability crisis.
• Keep it simple, stupid: Spinoffs are beating the market, while conglomerates are lagging behind.

Economic reports: It’s not just the Fed in the hot seat this week—the European Central Bank, the Bank of England, and the Bank of Japan are all set to make their own interest rate decisions tomorrow. Plus, the housing market remains in the spotlight with a report on new home sales for January, and we’ve got the usual weekly initial jobless claims reading.

Earnings announcements: FedEx, Alibaba, Intuitive Machines, and Darden Restaurants

Everything else: The First Four are in the tourney, and the real games are set to begin, with the first matches of the men’s March Madness tournament.