FINANCIAL BLOG

Inflation’s effects on the economy, monetary policy, and the financial markets are wide-ranging. Higher inflation can constrain economic growth, tighten financial conditions, drive interest rates higher and even restrain stock valuations — higher inflation dampens the present value of future earnings and, historically, correlates with lower stock valuations.

LPL Research provides its Weekly Market Performance for the week of June 9, 2025. Major U.S. averages ended mixed after reversing modest week-to-date gains Friday in response to the significant escalation in the Israel-Iran military conflict to close the week. European equities fell over the last five days amid geopolitical and trade concerns, although the U.K. managed to eke out a small gain, while major Asian markets ended mixed.

There have been plenty of catalysts supporting the broader market’s recovery from the correction lows set last month. Oversold conditions fueled by indiscriminate selling left the S&P 500 with washed-out market breadth and a hard reset of its lofty valuation. First quarter earnings season came in much better than feared, and most companies unexpectedly did not pull forward guidance.