Last Week on Wall Street – June 21st, 2025

S&P 500: -1.17% DOW: 0.01% NASDAQ: 0.21% 10-YR Yield: 4.37%

What Happened?

Wall Street closed out the second week of June in the red, marking back-to-back weekly losses as global tensions and economic headwinds rattled investor confidence. The S&P 500, Dow, and Nasdaq all slipped, driven by renewed fears of conflict in the Middle East and growing signs that tariffs are beginning to wear down the U.S. consumer.

Nothing good ever comes from war—and this week proved that again. Israel launched strikes against Iranian military assets, Iran responded with threats of escalation, and the U.S., as Israel’s closest ally, was quickly pulled into the geopolitical firestorm. The mere mention of nuclear threats sent a chill through markets. Volatility jumped, oil prices surged, and investors sought cover in safe havens.

Meanwhile, the economic picture at home wasn’t offering much relief. The Federal Reserve held interest rates steady, as expected, but Chair Powell made it clear that the Fed is in no rush to cut. Despite slowing growth projections and rising political pressure, the Fed wants more data before it pivots. Translation: rate cuts are still a “maybe later,” not a “coming soon.” As if that wasn’t enough, May retail sales came in soft, signaling that consumers could finally be starting to feel the pinch.

Central bank signals stagflation fears, Powell says Fed ‘well positioned to wait’ on rates

Fed kept interest rates within their target goal of 4.25-4.5%
Powell sees no signs of a weakening economy and holds rates steady.
The Fed still believes there will be an impact on prices seen by consumers, they are waiting to see that effect before taking a response

The key takeaway – Another much-anticipated Federal Reserve meeting came and went this week, with investors and analysts hanging on Chair Jerome Powell’s every word for clues on the future of interest rates and the broader economic outlook. Markets had already priced in virtually zero chance of a rate cut, but in today’s sentiment-driven environment, tone and nuance matter more than ever.

The result? A bit of a snooze fest. The Fed left rates unchanged, as expected, and Powell gave no indication that a pivot is imminent. The central bank continues to see no definitive signs of economic weakness, at least not enough to justify a policy move. While they acknowledged that tariffs are beginning to creep into the system, the Fed maintained that hard data hasn’t yet shown significant damage.

That said, there was one key update: the Fed quietly trimmed its GDP growth outlook, warning that the full impact of tariffs may hit consumers in the coming months through higher prices at the checkout. In other words, the pain may be coming, just not yet.

For now, markets remain in wait-and-see mode, clinging to the idea that slower growth will eventually bring rate relief. Until then, it’s status quo, and Powell’s calm hand remains firmly on the wheel.

US Equity Funds See Hefty Outflows on Israel-Iran Conflict

New political tensions have risen between Iran and Israel, with the U.S. taking a big brother stance behind Israel warning Iran of further escalation.
Petroleum price shot up in fears of the effects on trade across the Straight of Hormuz.

The key takeaway – Markets took a hit this week as geopolitical tensions flared between the U.S., Iran, and Israel. The latest round of instability was sparked by a series of tit-for-tat attacks, with Israel targeting Iranian military infrastructure and Iran responding with strikes on energy assets. The U.S. has backed Israel diplomatically while warning Iran against further escalation, adding another layer of uncertainty to an already fragile global backdrop.

Oil prices jumped on fears that the conflict could disrupt global supply chains, particularly if tensions spill into the Strait of Hormuz, one of the most critical checkpoints for 20% of the World’s petroleum trade. Meanwhile, equity markets pulled back, with investors rotating into defensive positions and volatility spiking.

Looking ahead, the path forward is murky. Any further escalation could keep oil prices elevated, increase volatility, and draw attention to sectors tied to energy security and defense. For now, the market is bracing for more headlines, and even more turbulence.

Americans turn cautious and retail sales slide after a spring rush to beat tariffs

May, retail stores & restaurant sales dropped 0.9%, after a 0.1% decline in April.
Sales drop was led by a steep decline in automobile sales, after a strong March buying spree, as consumers tried to beat tariff implications.

The key takeaway – The U.S. consumer, long the MVP of the post-pandemic economy, finally showed signs of fatigue in May. Retail sales fell 0.9% last month, the sharpest monthly drop since January and well below expectations. After months of shrugging off inflation, high rates, and geopolitical noise, shoppers are starting to tap the brakes.

Much of the weakness came from autos and gas, two of the most rate-sensitive corners of the economy. Auto sales dropped over 3%, likely a hangover from early-year strength and price fatigue. Gas station sales also fell as prices at the pump cooled off.

But beneath the headline, the story gets more nuanced. Core control group sales, a cleaner read on consumer demand that strips out autos, gas, restaurants, and building materials, actually rose 0.4%. So, while big-ticket spending is cooling, the average household isn’t in retreat mode just yet.

Markets took the report in stride. Stocks wobbled slightly, bond yields dipped, and the rate cut crowd found a new talking point. But the Fed won’t flinch on one soft print. What matters now is whether this marks a blip, or the beginning of a broader slowdown.