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Treasury yields pare earlier drop after Fed Chief Powell

speaks

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Concerns about Middle East persist

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Iran leader rejects Trump's demand for surrender

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Indexes: Dow down 0.1%, S&P 500 down 0.03%, Nasdaq up 0.1%

(Updates close with volume, details, closing prices)

By Caroline Valetkevitch

NEW YORK, June 18 (Reuters) -

The S&P 500 ended nearly flat on Wednesday, giving back

earlier gains after Federal Reserve Chair Jerome Powell said

inflation in goods prices is expected to go up over the summer

as President Donald Trump's tariffs work their way to consumers.

The U.S. central bank

left interest

rates unchanged, as expected. In the statement,

policymakers maintained expectations for two cuts this year, but

a rising minority expected no rate cuts at all. Also, they

slightly slowed the expected pace to a single

quarter-percentage-point cut in each of 2026 and 2027.

Stocks were moderately higher before Powell's comments.

As he spoke, U.S. Treasury yields also pared most of their

earlier drop.

"He made it quite clear he's not going to change

monetary policy until they are sure of the tariffs' effect on

inflation," said Peter Cardillo, chief market economist at

Spartan Capital Securities.

So, "you have the combination of yields going up, and

the fact that it's going to take time to see the effects" of the

tariffs, he said.

Investors also have been closely watching developments in

the Middle East. Some worry about the possibility of a more

direct U.S. military involvement in the Israel-Iran aerial war.

Iranian Supreme Leader Ayatollah Ali Khamenei rejected

Trump's demand for unconditional surrender. Trump said his

patience had run out, though he did not indicate what his next

step would be.

Energy led declines among S&P 500 sectors, while

information technology was up the most.

The Dow Jones Industrial Average fell 44.14

points, or 0.10%, to 42,171.66, the S&P 500 lost 1.85

points, or 0.03%, to 5,980.87 and the Nasdaq Composite

gained 25.18 points, or 0.13%, to 19,546.27.

Early in the day, initial

jobless claims data showed the number of Americans filing

new applications for unemployment benefits fell last week, but

stayed at levels consistent with a further loss of labor market

momentum in June.

Powell's "message was consistent with what has been

telegraphed. Inflation is still elevated, but tariffs in the

coming months will be a wild card. Powell said if not for

tariffs he would be cutting rates now," said Sahak Manuelian,

managing director of global equity trading at Wedbush Securities

in Los Angeles.

Shares of stablecoin issuer Circle Internet ( CRCL )

rose 33.8% after the

U.S. Senate passed

a bill to create a regulatory framework for dollar-pegged

cryptocurrency tokens known as stablecoins.

Steelmaker Nucor ( NUE ) rose 3.3% following a

second-quarter profit forecast that came above analysts'

estimates.

Advancing issues outnumbered decliners by a 1.28-to-1

ratio on the NYSE. There were 102 new highs and 55 new lows on

the NYSE.

On the Nasdaq, 2,613 stocks rose and 1,882 fell as

advancing issues outnumbered decliners by a 1.39-to-1 ratio.

Volume on U.S. exchanges was 16.48 billion shares,

compared with the 17.99 billion average for the full session

over the last 20 trading days.