Israel-Iran conflict will hang over markets next week, with Fed meeting at hand
The Israel-Iran conflict will continue to hang over the stock market next week, as investors wait and see whether there will be an escalation in the region. Traders will also be awaiting the latest Federal Reserve meeting. Though the initial stock response to the attack was subdued, equity losses deepened on Friday afternoon. The Dow Jones Industrial Average lost more than 800 points as Iran launched missiles at Israel, according to Tehran and Israel Defense Forces. The worsening tensions spurred a return to risk-off sentiment in the market, just as the S & P 500 was nearing its all-time record. Oil prices surged, while defense stocks rallied. Volatility is back up, with the CBOE Volatility index on Friday briefly climbing above 20. Semiconductor stocks , which enjoyed a big rally this week, are down. Nvidia is down. Gold , which stalled a bit from its historic rally this year, has perked up again. .VIX 1D mountain CBOE Volatility Index, over one day Investors are reacting by taking money off the table heading into the weekend, worried further retaliatory actions between the two countries will mark an escalation of conflict in the region. "Markets' reaction next week is really going to coalesce around what else we learn about the ongoing events between Israel and Iran, and if there's escalation by either side, retaliation and/or escalation by Israel, that will likely keep a bit of a cloud on risk assets," said Art Hogan, chief market strategist at B. Riley Wealth Management. "And only time will tell what that looks like." On Friday, the 30-stock Dow was on course for a losing week, down more than 1%. The S & P 500 was down 0.4% on the week, while the Nasdaq Composite was off 0.6%. Fed meeting The Fed is just about universally expected to hold rates steady next week. But, more important will be what Fed Chair Jerome Powell says in his post-meeting comments, as well as what surfaces in the latest Summary of Economic Projections, in regards to how policymakers are thinking through the path forward for monetary policy. According to the CME FedWatch Tool , markets are currently pricing in two quarter percentage point rate cuts, starting in September. For the most part, investors are expecting the same consistent message from Powell, who they're sure will reiterate that the central bank remains data dependent. This week's cooler inflation data , for example, could give policymakers flexibility to continue watching for the impact of tariffs on the economy in upcoming reports. But, some wonder if there could be a slight dovish tilt to the Fed chair's messaging, especially with the labor market, while still resilient, starting to show some cracks. "The market is going to be curious to hear how the Fed is assessing these dynamics of more benign inflation data, plus a slight deterioration in labor market data, and basically, does that allow them to strike more dovish tone at this meeting," said John Belton, portfolio manager at Gabelli Funds. "I do think that the recent data supports at least a couple cuts by year end," Belton continued. "The question is, are these going to be reactive, or is it coming from a place of confidence?" Recent Fed speak has investors more confident that central bank policymakers could start to cut as well. In late May, Fed Governor Christopher Waller told Fox Business that he sees a path for the central bank to cut interest rates in the second half of 2025, if Trump's tariffs are down to around 10%. However, others expect the Fed may not cut as much as the market is pricing in. David Kelly, chief global strategist at J.P. Morgan Asset Management, said he anticipates just one rate cut this year, worried that the reconciliation bill, pushed through when the consumer remains robust, will be inflationary for the economy. "That, I think, is something the Federal Reserve is very focused on," Kelly said. "Whatever they pretend about cutting the deficit in the long run, in fact, what they're going to do is expand the deficit quite a lot in 2026 relative to where it was in fiscal 2025 and the Fed doesn't want to be stimulating, or be further stimulating, in an already over stimulated economy." Next week will also be a shortened trading week, with markets closed Thursday for the Juneteenth national holiday. Week ahead calendar All times ET. Monday, June 16 8:30 a.m. Empire State Index (June) Bond market: Auction 20-year bond Earnings: Lennar Tuesday, June 17 8:30 a.m. Export Price Index (May) 8:30 a.m. Import Price Index (May) 8:30 a.m. Retail Sales (May) 8:30 a.m. Capacity Utilization (May) 9:15 a.m. Industrial Production (May) 9:15 a.m. Manufacturing Production (May) 10 a.m. Business Inventories (April) 10 a.m. NAHB Housing Market Index (June) Bond market: Auction 5-year TIPS Earnings: Jabil Wednesday, June 18 8:30 a.m. Building Permits preliminary (May) 8:30 a.m. Continuing Jobless Claims (06/07) 8:30 a.m. Housing Starts (May) 8:30 a.m. Initial Claims (06/14) 2 p.m. FOMC Decision 2 p.m. Fed Funds Target Upper Bound Thursday, June 19 Markets closed for Juneteenth National Independence Day Friday, June 20 8:30 a.m. Philadelphia Fed Index (June) 10 a.m. Leading Indicators (May) Earnings: Darden Restaurants, CarMax , Kroger
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Litecoin Price Struggles Despite ETF Optimism as War Tensions Rattle Market
Litecoin LTC fell more than 4.3% over the past week, and is down more than 14% for the last 30-day period, with the latest sell-off coming as part of a wider risk asset sell-off. That sell-off came after Israel attacked Iran in a bid to put an end to its nuclear program and harm its missile capabilities, and Iran later retaliated with a salvo of missiles. The conflict has spooked global markets, reducing the total cryptocurrency market capitalization by more than $150 billion. LTC was severely affected by the sell-off. As the dust settled, Litecoin attempted a fragile rebound, climbing back above $86. But the recovery has stalled under mounting technical resistance. The $97.80 level, coinciding with the 23.6% Fibonacci retracement according to to CoinDesk Research's technical analysis data model, has proven difficult to breach. Momentum indicators like RSI at 43.46 and a flat MACD histogram show limited energy behind the move, suggesting a phase of consolidation. Volume tells a similar story. Litecoin's trading activity dropped 42% following the initial plunge, even as it briefly surged through the $85.90 resistance level during a high-volume spike late Friday. That breakout, however, was quickly met with profit-taking that brought it back down to $85. Looming in the background is hope for a spot litecoin ETF. Bloomberg ETF analysts Eric Balchunas and James Seyffart estimate a 90% chance of approval. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 hours ago
- Yahoo
Rising oil prices have a surprising new impact
Rising oil prices have a surprising new impact originally appeared on TheStreet. The recent Israel-Iran conflict led to a dramatic shift in the markets as the price of the benchmark Brent crude oil rose more than 10%, hitting its highest point since January. On June 13, it closed at $75.18 a barrel. On the other hand, Bitcoin fell as much as 5% following the attack before recovering some losses. As per Kraken, it was trading at $104,984.23 at press time. The market dynamics in the wake of the latest escalation in the Middle East were a matter of intense discussion on Crypto Twitter. An X user, @R1chrdHeartLose, drew an interesting correlation between the ETH/BTC chart and oil price during 2021-25. The Russia-Ukraine war led to the hike in oil prices in early 2022, nearing $120 a barrel. But it began to slide downwards from mid-2023 onwards. In early 2025, oil prices crashed to nearly $60 a barrel but rebounded to $75 due to the recent conflict. The prices of cryptocurrencies peaked around 2021, with Bitcoin hitting north of $60,000. But the crypto winter soon crept in, but the listing of U.S. spot Bitcoin exchange-traded funds (ETFs) in January 2024 led to its price rising to around $70,000. The subsequent breakdown soon led to another Bitcoin rally once Donald Trump won the presidential election in November 2024. His pro-crypto policy had the king coin hitting a new record high of $111,970.17 on May 22, 2025. The current price dynamics of oil and crypto reflect a divergence from the correlation drawn by the X user. Traders are looking at oil as a safe haven asset, crypto no more so. Rising oil prices have a surprising new impact first appeared on TheStreet on Jun 14, 2025 This story was originally reported by TheStreet on Jun 14, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 hours ago
- Yahoo
Veteran fund manager issues dire stock market warning
Veteran fund manager issues dire stock market warning originally appeared on TheStreet. The stock market loves climbing a wall of worry. We've certainly seen that over the past two months. Despite worry over mounting U.S. debt and tariff impacts on inflation and the economy, the S&P 500 has rallied 20%. Technology stocks have done even better. The Nasdaq Composite, home to most tech leaders, is up 27%. The rally since President Trump paused most reciprocal tariffs announced on April 2, so-called "Liberation Day," for 90 days has been impressive. However, there's good reason for concern, especially since the S&P 500 is challenging all-time highs and its valuation is arguably becoming frothy risk that stocks could lose some of their luster after their rally has caught the attention of many Wall Street veterans, including long-time hedge fund manager Doug Kass. Kass has been navigating the markets since the 1970s, including as research director for Leon Cooperman's Omega Advisors, and his experience through good and bad times helped him correctly predict the sell-off earlier this year and the market bottom in April. This week, Kass updated his stock market outlook, including a surprisingly long list of red flags for why investors should be cautious. The best set-up for tantalizing returns is a market that's oversold enough to have reset forward price-to-earnings ratios to levels near the lower end of their historical averages. In February, when stocks were notching all-time highs right before the tariff-fueled reckoning, the S&P 500's P/E ratio eclipsed 22, and most sentiment measures were flashing sell-off through early April erased much of that frothiness, driving the S&P 500's P/E ratio to 19 and below five-year averages of 19.9 — not bargain-basement priced, but low enough to help catapult stocks from severely oversold readings. As a reminder, CNN's Fear & Greed indicator was at "Extreme Fear," and bearishness by most measures was sky high in the days after the April 2 tariff announcement. Now that the stock market is back near its highs, sentiment has turned optimistic again, with CNN's measure flashing "Greed." Because earnings forecasts haven't materially increased, the S&P 500's P/E ratio is north of 21 — hardly cheap. "Valuation multiples expanded in a relief rally from mid-April to now and the S&P 500 now trades at 21x forward earnings, 35% above average," wrote Bank of America analysts to clients on June 14. "The index looks statistically expensive relative to its own history on all 20 of the valuation metrics we track." Doug Kass has tracked the market successfully through 1970s skyrocketing inflation, 1980s double-digit interest rates, the Savings & Loan crisis, the Internet boom and bust, the Great Recession, a pandemic, and the bear market of 2022. He's seen a lot over his nearly 50-year career, making his stock market warning now worth paying attention to. "Equities haven't been this unattractive since late 2021," wrote Kass on TheStreet Pro. "There is little room for disappointment. More Economic Analysis: Hedge-fund manager sees U.S. becoming Greece A critical industry is slamming the economy Reports may show whether the economy is toughing out the tariffs The concern that stocks have priced in much of the good news likely to come from ongoing trade negotiations may have merit, given this week's China trade deal news left tariffs at current levels near 55%. As the impact of tariffs flows through supply chains, inflation may start rising within months, crimping household and business spending. Unfortunately, that's not the only risk on Kass's mind. The money manager provided a long list of threats that could derail stocks' rally. It's a long list, so you may want to refill your beverage. He writes: Political and geopolitical polarization and competition will probably translate into less political centrism and a reduced concern for deficits, creating structural uncertainties, limited fiscal discipline, and imprudence around the globe ... and for the possibility of bond markets to "disanchor." The cracks in the foundation of the bull market are multiple and are deepening, but they are being ignored (as market structure changes have led to price momentum [fear of missing out] being favored over value and common sense). With the S&P 500 Index at around 6000, the downside risk dwarfs the upside reward for equities — in a ratio of about 5-1 (negative). Valuations (a 22-times forward Price Earnings Ratio) and (consensus) expectations for economic and corporate profit growth are all inflated. Being dismissed are JPMorgan CEO Jamie Dimon's and others' dour comments on complacency and a view that the corporate credit market is "ridiculously over-stretched.' Look for the soft data (see last week's weak ISM and climb in jobless claims) to move into (and weaken) the hard data led by a slowing housing market likely to provide ample near-term evidence of the exposure and vulnerability of the middle class. Below trend-line economic growth (housing will lead us lower) coupled with sticky inflation lie ahead ("slugflation") — uncomfortable for a Federal Reserve which has to make increasingly more difficult decisions. Corporate profit growth (rising +13% in 1Q2025) will markedly decelerate in this year's second half. The equity risk premium is at a two-decade low — typically consistent with a slide in equities. The S&P Dividend Yield is at a near-record low of 1.27% — and the spread between the dividend yield and the 10-year U.S. Treasury note yield has rarely been as wide. With so many possible adverse outcomes, my baseline expectation is for seven lean months ahead over the balance of 2025. Kass is clearly nervous that any single or combination of headwinds could cause stocks to give back some gains. What should investors do? Over time, the stock market goes up and to the right, so those with long-term horizons are often best off sticking to their plan, recognizing that there will be bumps and bruises along the way. However, investors with a shorter-term horizon may want to rein in some risk, pocket some profit, and increase "dry powder" to take advantage of any weakness if Kass's warning proves fund manager issues dire stock market warning first appeared on TheStreet on Jun 14, 2025 This story was originally reported by TheStreet on Jun 14, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
