The Market Down & Dirty 06.16.25

The Data

Equities moved slightly lower last week as tensions in the Middle East emerged once again.

• S&P 500 -0.36% Dow -1.32% Russell 2000 -1.42%, Nasdaq -0.63%.[1]

• The All-Country World Index declined -0.45%.1

S&P 500 sub-sectors were mixed last week.

• Energy led to the upside with a gain of almost 6%.1

• Financials, Consumer Staples & Industrials led to the downside.1

The CBOE Volatility Index (VIX) gained over 20% and ended the week at 20.84.1

US Treasury bond yields declined last week.

• US 2yr -0.08% at 3.96%, 10yr -0.10% to 4.41%, 30yr -0.07% to 4.90%.1

• Inflation readings coming in lower than expected helped rates move lower.

Commodities as an aggregate asset class were higher last week.

• WTI Crude shot higher by +13.16%.1

• Gold gained +3.67%.1

The US Dollar index declined -1.08%.1

In our opinion, U.S. economic data was mixed last week.

• The Small Business Optimism index showed an increase in its latest monthly reading.1

• Continuing unemployment claims rose to their highest level in 3 years.1

• Both CPI & PPI measures of inflation came in lower than expected.1

An index of equities outside the US (FTSE All-World ex-US) lost -0.23%.1

Conclusion

Stocks retreated last week as renewed fighting in the Middle East drove equities lower on Friday.

• For weeks equities have by and large been grinding higher as major headline shifts evaporated or have become priced in.

• The S&P 500 Index & Nasdaq both declined less than 1% last week.1

• Small caps led to the downside with a loss of -1.42%.1

Despite the week, the S&P 500 remains less than 3% away from a new all-time highs.1

S&P 500 sub-sectors were mixed last week as no clear trends were to be observed.

• Energy led to the upside by a wide margin on the back of oil prices shooting higher in response to the tensions between Israel and Iran.

• Financials were the worst performer at -2.57%.1

Volatility as measured by the VIX rose notably last week and ended above the critical 20 level.

• Despite this spike, the S&P 500 hasn’t risen or fallen more than 0.6% in 11 of the past 13 trading sessions.

• This development hasn’t happened since December.

• This supported the slow grind higher than we’ve witnessed over the last several weeks.

  • The June options expiration is Friday this week so we expect some tame volatility as major participants reload on these exposures.

How things settle following this expiration will paint a compelling picture on where equities are most likely to head from here for the rest of 2025.

Interest rates moved lower last week.

• Inflation readings coming in lower than expected put a damper on an upward momentum in yields.1

• The 30yr US Treasury auction was surprisingly well received.

All eyes will be on the Federal Reserve’s latest policy meeting this week as well as their economic & interest rate projections.

• Expectations are for the Fed to keep rates unchanged while weakening inflation & continuing unemployment claims might pressure the central bank towards cutting.

• Markets are currently pricing in an 80% chance the Fed cuts at its September meeting.1

  • We would not be shocked if there appeared to be a dovish pivot from Fed Chairman Powell’s commentary.

Commodities moved notably higher last week led by oil.

• Oil gained over 13% on the back of the conflict in the Middle East.1

• Historically, these bounces higher in oil on the back of Israel/Iran news are short lived as Iran accounts for less than 4% of global oil production.

• Gold gained on the week and is back near all-time highs.

Justin Greenhill - Chief Investment Officer – justin@sollinda.com 

Ryan A. Mumy, CFP®, AIF® - CEO – ryan@sollinda.com   

Phone:  828-855-9400

[1] Source: Bloomberg – 6/13/2025