Weekly Market Performance — June 20, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of June 16, 2025. Major U.S. averages treaded water this week as investors grappled with ongoing airstrikes between Israel and Iran and concerns over potential U.S. involvement in the conflict. Meanwhile, both European and Asian markets ended lower due to the geopolitical overhang and mixed local catalysts. Treasuries gained ground as haven buying continued and markets digested the latest Federal Reserve (Fed) rate decision and economic forecasts. Commodities gained ground with oil prices continuing to rise while gold’s rally took a breather.

Index Performance

U.S. and International Equities

U.S. Equities: U.S. stocks steadied over the course of an abbreviated week, paring back weekly gains after a bright start with the S&P 500 ending slightly lower while the Nasdaq and Dow Industrials edged higher. Big tech stocks powered a solid advance on Monday, although investors continued to grapple with heightened Middle East tensions as airstrikes between Israel and Iran continued. President Donald Trump stated Iran has shown interest in de-escalation talks, but nonetheless, concerns of U.S. involvement were flagged as the primary market overhang for most of the week. Trade headlines, while somewhat on the backburner, also remained in focus with the July 9 tariff reprieve expiration date rapidly approaching. The President left the G7 summit early, without securing a trade deal with Japan as some had anticipated, to prepare for a meeting with his national security team Tuesday afternoon in the White House Situation Room.

The Federal Open Market Committee (FOMC) held rates steady as expected Wednesday afternoon, although markets churned as investors digested mixed takeaways from the updated dot plot and economic projections. Additionally, Fed Chair Jerome Powell flagged near-term tariff-related impacts. Following Thursday’s market holiday, stocks briefly received support as fears of imminent U.S. involvement in the Israel-Iran conflict eased after the White House suggested chances of a negotiated settlement are good. However, equities drifted back toward the week-to-date flatline as chipmakers dropped on trade concerns after reports suggested the U.S. may revoke waivers for allied trade partners with semiconductor plants in China.

International Equities: Across the pond, European equities ended lower. The European benchmark STOXX 600 stumbled through a mid-week losing streak as investors took risk off the table amid speculation that the U.S. would join Israel’s fight against Iran. Local macro data was mixed with headlines including U.K. survey data indicating firms were cutting jobs and increasing prices due to the recent tax hike from the finance ministry. Plus, U.K. retail sales unexpectedly slumped last month despite signs of consumer confidence stabilizing while the Swiss government cut economic forecasts. On a brighter note, the German ZEW investor sentiment survey spiked higher this month and U.K. inflation ticked lower after April’s jump. Also of note, the European Commission reportedly proposed looser securitization regulations for banks aimed at bolstering lending.

Major Asian markets ended mostly lower, snapping a two-week win streak for the broader region amid elevated geopolitical tensions. South Korea outperformed, with the benchmark Kospi Index posting a nearly 5% weekly gain and eclipsing the 3,000-point mark for the first time since 2021. Korean equities were boosted by ongoing policy enthusiasm in the wake of the presidential election, lifted by budget stimulus and economic reform optimism. Japan managed mild gains on the back of chip and gaming-related stocks, although gains were capped by authorities announcing a notable reduction in government purchases of superlong bonds. Hong Kong led losses, while mainland China ended modestly lower and Taiwan ended flat.

Fixed Income, Currency, and Commodity Markets

Fixed Income: The Bloomberg U.S. Aggregate Index traded higher this week. The monetary policy rate-sensitive two-year yield and the 10-year yield both ended roughly four and three basis points lower, respectively. Treasuries received a haven bid as speculation of U.S. involvement in the Middle East, sending investors toward longer-dated securities on concerns of wider implications. This week’s Fed meeting proved to be rather anti-climactic with little market impact on Treasury yields despite the most recent dot plot showing fewer rate cuts expected in 2026 and 2027. Markets continue to expect two rate cuts this year and a fed funds rate troughing around 3.6%, which was the same expectation markets had before the Fed meeting. With inflationary pressures easing over the last four months and the Bloomberg Economic Surprise Index at its most negative reading since last September’s growth scare (meaning economic data has generally been coming in worse than expected), markets may start to price in a more aggressive rate cutting cycle, which should keep rates from moving much higher than current levels (absent an inflationary shock).

Meanwhile, reports that U.S. bank regulators plan to reduce the enhanced Supplementary Leverage Ratio (eSLR) aimed at bolstering balance sheet capacity and Treasury demand, were also in play, interpreted by some that the White House is aiming to lower long-term interest rates. However, U.S. banks are already near full-on levels of Treasury ownership and the amount of additional buying is likely limited. Banks could marginally add to their Treasury holdings, but this move by regulators likely would not serve as a cure-all for Treasury demand — especially if the reconciliation bill adds to the budget deficit. Elsewhere, the April Treasury reporting data, which was also released this week, showed no drop-off in foreign interest in Treasury markets, despite the “Sell America” narrative that has persisted since April.

Commodities and Currencies: The broader commodities complex logged back-to-back weekly gains on steady gains throughout the last five days. West Texas Intermediate (WTI) crude added over 2.5% despite crude prices facing downward pressure to start the week as the Strait of Hormuz remained free of tanker blockages amid Israel and Iran’s airstrikes. However, oil prices continued to be underpinned by geopolitics as the U.S. mulled over entering the conflict and called for Iran’s unconditional surrender while U.S. oil inventories dropped last week. Gold prices ended lower, marking its first weekly decline over the last three weeks. The yellow metal was weighed down as traders booked profits to cover losses in other areas of the market and on concerns that sticky inflation will continue to limit rate cuts, amid continued calls that the rally in gold may be growing fatigued. Silver also traded lower and copper steadied. In currencies, the dollar strengthened over the last five days for its biggest weekly gain in a month after catching a light haven bid.

Economic Weekly Roundup

Tuesday’s May retail sales release marked the second consecutive month of weaker-than-expected data after a steep 0.9% decline from April’s revised 0.1% decline. May results were weighed down by an expected slide in auto sales as consumers snapped up new vehicles ahead of U.S. tariffs. Also on Tuesday's macro calendar, U.S. import prices were unchanged from a month ago while export prices dropped 0.9% from April, and jobless claims broadly arrived in-line with consensus forecasts.

As expected, the FOMC unanimously voted to hold rates steady Wednesday, causing equities to whipsaw and Treasury yields to pare daily losses as markets analyzed mixed takeaways from the latest Summary of Economic Projections (SEP) and Fed Chair Jerome Powell’s press conference. The Committee’s updated dot plot leaned dovish, with members still projecting two rate cuts this year. Fed Chair Powell stated that policy is modestly restrictive, compared to his reference to a “clearly restrictive stance of policy” in March, and that the Committee is well positioned for a timely response if necessary. After underscoring that cooling inflation remains above the 2% target, Powell also remarked that “meaningful” tariff-related growth and inflationary impacts will likely be felt later this summer. On the other side of the dual mandate, Powell noted the labor market remained on solid footing. As such, the latest 2025 projections indicated the median participant reduced economic growth forecasts to 1.4% this year, while raising unemployment forecasts from 4.4% to 4.5% and core Personal Consumption Expenditures (PCE) expectations from 2.8% to 3.1%. Broadly, Powell appeared relaxed regarding the economy, noting economic resilience, stating that economic uncertainty remains elevated but has diminished. Although, the reduction to 2026 and 2027 rate cuts in the dot plot suggests the Fed expects a slower pace of easing and somewhat stickier inflation as economic growth cools.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: S&P Global U.S. Manufacturing, Services, and Composite PMIs (June preliminary), Existing Home Sales (May)

• Tuesday: Philadelphia Fed Non-Manufacturing Activity (Jun), Current Account Balance (1Q), FHFA House Price Index (Apr), S&P Case-Shiller U.S. 20-City and National Home Price Index (Apr), Richmond Fed Manufacturing Index (Jun), Richmond Fed Business Conditions (Jun), Conference Board Consumer Confidence Report (Jun)

• Wednesday: MBA Mortgage Applications (Jun 20), New Home Sales (May), Building Permits (May final)

• Thursday: Advance Goods Trade Balance (May), Wholesale Inventories (May preliminary), Retail Inventories (May), GDP Annualized (1Q third reading), Personal Consumption (1Q third reading), Core PCE Price Index (1Q third reading), Chicago Fed National Activity Index (May), Durable Goods Orders and Shipments (May preliminary), Capital Goods Orders and Shipments (May preliminary), Initial Jobless Claims (Jun 21), Continuing Claims (Jun 14), Pending Home Sales (May), Kansas City Fed Manufacturing Activity (Jun)

• Friday: Personal Income (May), Personal Spending (May), Headline and Core PCE Price Index (May), Bloomberg U.S. Economic Survey (Jun), University of Michigan (Jun final), Kansas City Fed Services Activity (Jun)

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

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