Why the Dow Dropped 500 Points After the Fed Meeting

Good morning and welcome to the One of a Kind Financial Show Daily. I'm Mike Milligan. It's Thursday, June 18th. Yesterday, Kevin Warsh walked into the first Fed press conference, dropped the easing bias, refused to play dot plot, and cost the Dow 507 points before sunset. Today, we'll unpack it, and I'm going to tell you why a 2-word Spanish phrase I keep using is the same reason this podcast exists. Let's go.

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Let's start where we left off yesterday. I told you to watch 4 things at 2:00 PM, between 2:00 PM and 2:30 PM yesterday. And here's what happened with each one. Number one, I said, watch the rate decision. The Fed held at 3.5 to 3.75 unanimously, by the way, 12 to 0. That's the first unanimous vote in a year. That part was a yawn. Everybody saw it coming. Number 2, I said, watch the statement. Warsh stripped it down to 130 words from 341. That's a 60% cut in what he said. He pulled out the easing bias language exactly as expected, and he added one new sentence that mattered. The committee will deliver price stability. That is not the language of a Fed that's about to cut. That is a Fed picking a fight with inflation. Number 3, I said, watch the dot plot. This is where the bomb went off. In March, the median dot showed 1 rate cut in 2026. Yesterday, that flipped completely. 9 out of 18 officials now expected at least 1 rate hike by year end. 6 of the 9 expected 2, and only 1 official still sees a cut. The median 2026 dot moved from 3.4 to 3.8, a 40 basis point hawkish swing in a single meeting. And the kicker, Warsh himself refused to submit a dot. He told reporters, I do not submit a dot. The dot plot does not help in implementing policy. He's the first Fed chair in recent memory to take that step. And then number 4, I told you to watch the press conference. Calm, smooth. Bloomberg called it slick. His key line from Kevin Warsh, I am pleased to report that members of the FOMC are unambiguous and unanimous. This committee will deliver price stability. He also said, forward guidance is not the business we should be in. Announcing a task force to potentially overhaul the Fed committee altogether. What did the market do? Well, the Dow was down 507 points to 51,492. S&P 500 down 1.2% to 7,420. The NASDAQ was down 1.34% to 26,021, the biggest one-day drop since June 10th. The 2-year Treasury yield jumped to 4.21%. That's a 1-year high. In big tech, Microsoft, Meta, Alphabet, Amazon all bled red yesterday to close the day. The CME FedWatch went from a 40% chance of holding rates through year-end down to 15.7% in minutes. The probability of an October hike now sits at 72%. The peace deal rally is dead. The Walsh era just beginning.

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Now, I want to tell you a story, and I promise this connects. I'm learning Spanish. My wife and I moved to San Juan, Puerto Rico in August of 2025, and I'm not good at it yet. I'm genuinely a beginner because of where I live, where I travel, and the clients I want to be able to serve more deeply. I'm committed to learning the language. So here's what happens. I'll walk into a restaurant, a shop, or strike up a conversation, and I'll start in Spanish, halting, imperfect, getting verb tenses completely wrong. And the person on the other end starts to politely correct me, or sometimes they look a little confused. And so I tell them in Spanish, Español es muy difícil. And then I say 2 words. Estoy aprendiendo. That means I am learning. Every single time, and I mean every single time, something incredible happens. Their face lights up, they smile, and then more often than not, they start switching into English to help me. Not because they want to take over the conversation, not because they think I can't do it, but because the moment I told them I am trying to learn, They became invested in helping me succeed. It's in the nature of people who live in Puerto Rico. That's in my nature too. And that is the heart of why this podcast exists. Most people don't watch financial news that way. They turn on CNBC and they hear, Warsh removed the easing bias and the dot plot moved 40 basis point hawkish. And they shut down because those words mean nothing. They don't want to look stupid, so they tune out and then they make blind decisions with their 401s, their mortgage, their retirement, and their kids' college fund. Here's what I want you to do. The next time you hear something on the financial news you don't understand, I want you to say to yourself and out loud if you have to, estoy aprendiendo. I am learning. Because the moment you give yourself permission to be a beginner, 2 things happen. One, you stop being afraid of the words, and 2, the right people come out of the woodwork to help you. That's what this show is. That's what I am. I'm now— I'm not a talking head shouting predictions at you from a Bloomberg terminal. I'm a certified financial planner whose mission is to educate, coach, plan, in that order. Think of this podcast as your daily dose of financial news and education spoken from Mike Milligan. A friend, a planner, a teacher, somebody on the other end of the conversation who lights up when you say, "I am learning." Estoy aprendiendo. And meets you where you are. So with the Fed in the rearview, here's what to watch for the rest of this week. Today at 8:30 a.m., weekly jobless claims. Watch for any softening in the labor market because the Fed is now daring the data to push them off the hawkish stance. A couple of companies that are household names report earnings today, Kroger and Darden Restaurants. Darden, think Olive Garden. Olive Garden is owned by Darden Restaurants. These are real economy reads on whether the consumer is still spending through 4-plus percent inflation. Tomorrow, FedEx is going to announce their earnings after the bell. FedEx is the global shipping bellwether. If volumes are slowing, That tells you something the Fed doesn't see yet. And then through the rest of the week, watch the 10-year Treasury yield. It closed at 4.465% yesterday. If it pushes through 4.75%, mortgage rates climb back above 7%. And this hits every home buyer and every home builder stock in the country. And here's the big takeaway from the war share. The rate cut trade is dead for now. If your plan was to build, was built assuming 3 or 4 Fed rate cuts this year, if you were made waiting to make a decision on real estate, you need to now revisit that plan today. Don't wait. That's your Thursday, June 18th edition of the One of a Kind Financial Show Daily. Estoy aprendiendo. We all are. That's the whole point. If you want a written one-of-a-kind financial plan built by someone who teaches first and sells second, that's what I do at One Oak Financial. I'm Mike Milligan. I educate, coach, plan. I'll see you tomorrow. This has been the One of a Kind Financial Show Daily with your host, Mike Milligan. I am an investment advisory representative with Advisory Alpha LLC. Ideas by Mike doing business as One Oak Financial is an unaffiliated Of Advisory Alpha LLC. This show is done for education purposes only. Please do not take any financial advice from this show directly and make your investment choices without first speaking to a financial pro. Understand the risks before making the decision. I'll see you tomorrow.

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