Busy, Holiday-Shortened Week Leaves Indices Mixed as Markets Digest Rising Middle East Tensions and Fed Decision

Busy, Holiday-Shortened Week Leaves Indices Mixed as Markets Digest Rising Middle East Tensions and Fed Decision

It was a busy, holiday-shortened week for markets as investors digested rising tensions in the Middle East and commentary from Fed Chair Jerome Powell following the June monetary policy meeting, where the Fed opted to leave interest rates unchanged. Global equities, as measured by the MSCI All Country World Index, slipped 0.41% for the week. U.S. equities as measured by the S&P 500 also declined, falling 0.12%. Despite heightened uncertainty and an uptick in volatility, markets remain in positive territory for the month as we enter the final full week of June.

Federal Reserve Rates

As noted above, The Federal Reserve held the target range for the federal funds rate steady at 4.25%–4.50% for a fourth consecutive meeting, as expected. Chair Powell noted the economy remains solid despite elevated uncertainty and emphasized the Fed’s readiness to respond to future developments. Updated projections show two rate cuts expected by year-end, while inflation and unemployment forecasts for 2025 rose and GDP growth expectations declined

Economic Data

Economic data largely disappointed last week, with May retail sales falling 0.9% following a 0.1% decline in April, driven in part by a sharp drop in auto sales after months of buyers purchasing ahead of tariffs. However, control group sales—which feed directly into GDP and exclude volatile categories—rose 0.4%, supported by strong spending on sporting goods and furniture. In housing, the National Association of Home Builders (NAHB) Housing Market Index fell to 32 in June, its lowest level since December 2022, reflecting increasingly cautious builder sentiment. Elevated mortgage rates and economic uncertainty continue to push buyers to the sidelines. Additionally, housing starts declined 9.8% in May to a 1.26 million annualized pace—the lowest since May 2020.

Economic Reports

For the week ahead, key economic reports include the Personal Consumption Expenditures (PCE) Price Index for May, scheduled for release on Friday. The PCE is the Federal Reserve’s preferred inflation gauge and will provide insights into recent price trends. Additionally, the Consumer Confidence Index for June is set to be released on Tuesday.

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.he very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.