The Daily Breakdown takes a closer look at oil prices, which have been driven higher by escalating geopolitical tensions in the Middle East.
Wednesday’s TLDR
- ‘Fed Day’ is on watch
- Oil prices near resistance
- Retail investors focus on BTC, Gold
What’s Happening?
Yesterday was focused on the tepid retail sales report, then more geopolitical worries from the Middle East. Remember that 20+ VIX we talked about? Well, that can bring added volatility spurts back into the market.
But today is all about the Fed.
At 2:00 p.m. ET, the Fed will announce its latest interest rate decision and its summary of economic projections (or SEP). While the market is not pricing in any change in interest rates for this meeting, the SEP — which is released quarterly and not at each meeting — will provide investors with the Fed’s updated outlook for things like GDP, inflation, and interest rates.
This has the potential to move markets, especially if certain aspects of the projections catch investors off-guard. (By the way, they can be found here under “Projection Materials”).
The Fed’s updated projections will give investors enough to do for 30 minutes before Chairman Powell takes the mic to read a prepared statement, then go through a Q&A session with reporters.
Among other things, those reporters will likely want to know when the Fed will feel comfortable enough to start cutting interest rates if inflation doesn’t meaningfully increase from current levels and if the labor market remains steady.
In all, we will be keeping a close eye on how Chair Powell and the Fed are seeing the economic landscape at this time.
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The Setup — Oil
Oil prices have been on the rise due to rising geopolitical tensions in the Middle East. For some investors, volatile oil prices will have them looking at the USO ETF for a potential trade. Others will take a closer look at the energy stocks ETF — the XLE — or individual names like Exxon Mobil and Chevron.
Or maybe some investors will just worry about how much it will cost to fill up a tank of gas.
When we look at the USO ETF, we see it running into potential resistance in the $82 to $83 area. There are two ways to look at this.
The first might be a bearish takeaway. One that says USO will soon run out of steam now that it’s nearing resistance, with investors considering taking profits or even engaging with bearish strategies like put options or bear put spreads (more on that below).
On the flip side, it may have investors looking for a potential breakout. If tensions escalate, it could fuel a further rally in USO, potentially sending it above current resistance — sort of like that short-lived spike we saw three years ago.
Options
For options traders, puts or bear put spreads could be one way to speculate on further downside. It could also be a way for USO bulls to hedge their long positions. Conversely, those who believe shares will break out — or those who are waiting for the potential breakout to happen first — can participate with calls or call spreads.
Find out more about options trading with our free Academy courses.
What Wall Street is Watching
According to the latest quarterly Retail Investor Beat survey by eToro, 57% of investors expect gold prices to increase in the short term, with 42% currently invested in the asset. That’s shining a light on gold, as well as the GLD ETF, which is up over 28% so far this year amid increased volatility and uncertainty. Retail investors are also allocating toward gold due to a weakening US dollar. Their other approach is…
…Bitcoin. With inflation remaining the top concern this quarter and given Bitcoin’s strong performance — up about 12% in 2025 and 61% over the past year — it’s no surprise that investors, particularly Gen Z, Millennials, and Gen X, are increasingly turning to digital assets. When asked which asset class they’re most likely to increase their investments in, 15% of respondents said crypto — slightly edging out domestic equities (14%) for just the second time.
Solar stocks tumbled after the Senate proposed phasing out tax credits by 2028, as the TAN ETF fell over 9% yesterday. More specifically, Enphase fell almost 24%, First Solar declined roughly 18%, and Sunrun plunged 40%. Despite the drop, some analysts argue that the Senate’s version is more favorable than the House bill.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.