The US stock market finished the week of June 16-20, 2025 mixed, with the S&P 500 closing slightly lower while the tech-heavy Nasdaq had small gains. The market continues to be influenced by geopolitical tensions in the Middle East, as the conflict between Israel and Iran continues to escalate. Oil prices remained on focus, with the WTI 4% higher in the week and already 20% up month to date. Fixed income had a solid performance, with US Treasury bond yields 2-4 bps lower and credit spreads marginally tighter.
The market closely watched the Fed's policy decision to hold rates at 4.25%-4.50% as expected, and also the release of its updated 2025 economic projections. The central bank revised GDP growth lower, from 1.70% to 1.40%, and inflation higher, from 2.70% to 3.00%. They also updated the expected unemployment rate to 4.50%, compared to the current 4.20%. More importantly, they still expect two rate cuts of 25 bps this year.
Meanwhile, US trade negotiations showed a mix of progress and ongoing challenges. Preliminary agreements have been reached with the UK and China on tariff reductions, but further negotiations are still required. The European Union reportedly declined a 10% rate on reciprocal tariffs, with Trump saying they still have not offered a fair deal.
Despite the news over the weekend that the US conducted a strategic intervention in Iran, markets are starting the week at a somewhat solid pace, with US equity indexes trading 0.50% higher and oil prices just 0.25% up, after a surge of almost 6% in the past few days. For now, investors' expectations of geopolitical tensions increasing dramatically and spreading to other regions still seem low, but the conflict will remain the central focus this week.
