Stock Market Slips as Recession Signal Flashes; Fed Divided on Rate Cuts

The S&P 500 and Nasdaq 100 closed lower amid persistent geopolitical and economic uncertainty. Early gains fueled by President Trump's announcement of delayed strikes on Iran's nuclear facilities were erased after The Conference Board's Leading Economic Index (LEI) triggered a recession warning.

The LEI's 2.7% decline over six months pushed its annualized growth rate below -4.1%, meeting one of two recession criteria. The other requires the six-month diffusion index to fall below 50, indicating broad-based declines across components like manufacturing, labor markets, and credit conditions. While imperfect, this indicator preceded the 2000 and 2008 recessions despite recent false alarms.

Chip and AI stocks faced particular pressure as market sentiment soured. The Fed's internal divisions on rate cut timing added to investor unease, creating headwinds for risk assets across traditional and crypto markets.