Unrest in the Middle East brought stock values lower last week, even as encouraging inflation data provided brief relief for traders. The week began with close attention to U.S.-China trade negotiations, but talks ended without progress, leaving tariffs in place and uncertainty intact. Thursday’s favorable Consumer Price Index report briefly lifted equities, but Friday’s market was sharply lower as geopolitical tensions escalated. Crude oil prices spiked more than 13% for the week, while gold surged over 3.5%, nearing April’s record high as investors sought safe havens. Among market sectors, energy and health care outperformed, while financials, industrials, and consumer staples lagged.
Bond yields declined as investors moved into Treasuries, with the 10-year Treasury yield falling to 4.42%. The U.S. dollar weakened for the second consecutive week, and gasoline prices slipped slightly. Despite the volatility, the S&P 500 remains up 1.62% year-to-date.
Last Week’s Economic News
- Consumer prices rose in May. Over the past 12 months, CPI rose 2.4%, signaling continued moderation in inflation despite tariff concerns.
- Wholesale prices increased in May after a small decline in April. Year-over-year, the Producer Price Index rose 2.6%.
- For fiscal year 2025 to date, the cumulative federal deficit stands at $1.365 trillion.
- The average national retail price for regular gasoline was $3.108 per gallon as of June 9, down $0.019 from the previous week and $0.321 below the price a year ago.
- Initial jobless claims were unchanged at 248,000 for the week ending June 7.
Eye on the Week Ahead
The Federal Open Market Committee meets this week to assess interest rate policy. While markets previously expected a rate cut in June, recent inflation and labor market data may prompt the Committee to hold rates steady. Investors will closely watch the Fed’s post-meeting statement for clues on the timing of any potential policy shift later this year.
Have a nice week!
Sincerely,
Robert G. Carpenter