Conflict Concerns Shake Up Markets; Fed Holds Steady:
Stock performance was mixed during the holiday-shortened trading week as investor sentiment was clouded by lingering uncertainty in the Middle East and the Fed’s decision to leave interest rates unchanged.
The S&P 500 Index slipped by 0.15%, while the Nasdaq Composite Index rose by 0.21%. The Dow Jones Industrial Average was flat (+0.02 %). The MSCI EAFE Index, which tracks developed overseas stock markets, declined 1.54%.1,2
Source: Bloomberg Finance, L.P. (Performance data normalized 6/13/25 = 0)
Stocks Rise, Then Slump
Stocks opened higher, and oil prices fell at the start of the week as investors hoped Middle Eastern tensions would ease.3
However, as investors parsed through updates on the conflict, stocks fell over ongoing uncertainty. Conflicting statements from those involved, as well as from world leaders, contributed to the uncertainty.4
Midweek, stocks rallied ahead of the Fed’s interest rate decision. Markets seemed to dismiss news that housing starts dropped unexpectedly to their lowest level in five years.
The Fed held short-term rates steady. Stocks moved up and down during the Fed Chair’s press conference before ending the trading session slightly down ahead of Thursday’s stock market holiday.5
Following the holiday, anxious investors refocused on geopolitical tensions and developments. As the week closed out, investors appeared to take a risk-off approach heading into the weekend.6
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
The Fed Holds Rates Steady
As expected, the Federal Reserve kept the Fed funds rate at its target range of 4.25% and 4.5%. However, the central bank did suggest it may adjust rates later this year, and policymakers expressed concerns about inflation and the outlook for gross domestic product.
Following the decision, Fed Chair Powell said policymakers are “well positioned to wait” before moving on short-term rates. Powell indicated that trade policy has clouded the inflation outlook, making policymakers concerned about consumer price.7,8
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1WSJ.com, June 20, 2025
2Investing.com, June 20, 2025
3MarketWatch.com, June 16, 2025
4CNBC.com, June 17, 2025
5WSJ.com, June 18, 2025
6CNBC.com, June 20, 2025
7MarketWatch.com, June 16, 2025
8WSJ.com, June 18, 2025
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