Markets Drop on Geopolitical Concerns, Weaker Data
Tuesday, June 17, 2025Market indexes finished today near session lows, after fighting their way back toward break-even by late morning. President Trump, fresh from exiting the G7 summit in Banff yesterday, has seemed to amplify rhetoric about a potential U.S. strike on targets in Iran, which would expand the conflict from one concerning Israel and Iran alone.As a result, energy was the only sector to finish the trading day in positive territory, up +4% on WTI to the highest levels of oil prices since mid-January: $74.89 per barrel, +3% on Brent crude to $72 per barrel. Solar companies took it on the chin today, as the Big Beautiful Bill passing through Congress has removed all assistance to domestic solar power initiatives.The Dow closed down -299 points today, -0.70%, and it was the best of the bunch. The S&P 500 found itself back below 6K again today, -50 points or -0.84%. The Nasdaq slipped -0.91%, as all Mag 7 stocks closed lower today, and the small-cap Russell 2000 took up the rear today, -0.97%.
Minutes before this morning's opening bell, we got monthly manufacturing data by way of Industrial Production and Capacity Utilization, both for May. The headline on Industrial Production reached -0.2%, below the -0.1% expected and the upwardly revised +0.1% from the previous month. Year over year, this print dwindled to +0.6%, less than half the prior month's read of +1.4%.Capacity Utilization, monitoring whether manufacturing is up near its full potential, struck the lowest level since November of last year: 77.4%. This was the third-straight monthly drop, from February's 12-month high 78.2%. April's unrevised 77.7% was where this month's consensus estimate was at. Current capacity utilization is -2.2% below the long-run average (from between 1972 and 2024). These are mildly disappointing numbers, demonstrating that our still-murky tariff policy has not yet firmed domestic manufacturing data, at least according to these metrics. But we'd consider ourselves still range-bound at current levels; though slightly off expectations, we do not see these data points falling off a table.
April Business Inventories came in as expected at 'unched' (0.0%), below the +0.1% from the prior month and also the third-straight lower monthly print. It's also the third time in the past 12 months we've seen a 0% read on inventories, but keep in mind: these are April figures, with the report coming from within the same general time period as the initial 'Liberation Day' tariffs. We'll get a better picture on these levels when we see the post-tariff months report.Homebuilder Confidence for June also came out this morning after the normal trading day began. Its headline was a disappointing 32, the lowest level we've seen since December of 2022, below the 35 anticipated and 34 reported the previous month. Over the past two years, as mortgage rates have climbed and remained at multi-year highs, we've seen this survey reach lower highs and lower lows. Once the Fed starts lowering rates again, perhaps we'll see a change here.
Continuing with housing data, ahead of Wednesday's open we'll see Housing Starts and Building Permits for May. No major changes are expected on either metric: Housing Starts are expected to tick down to 1.35 million seasonally adjusted, annualized units from 1.36 million in April. Permits look to tick up to 1.42 million from 1.41 million the prior month. Both are at historically cool levels, again owing to high mortgage rates keeping housing relatively stagnant.Also, with Thursday of this week a market holiday in observance of Juneteenth, Weekly Jobless Claims will be out a day early. Initial Jobless Claims are anticipated to come down slightly from the multi-month high 248K reported last week to around 246K. Continuing Claims last week shot up to their highest level since November of 2021 to 1.96 million. We may expect a downward revision here, as we've seen in weeks past. That said, we're on a three-week streak with longer-term claims above 1.9 million.Finally, the June Fed meeting will be its fourth in a row without making a move on interest rates. There is a near-100% certainty the Federal Open Market Committee (FOMC) will keep the 4.25-4.50% range we've seen since December. We'll also check the Fed statement accompanying the policy announcement and Fed Chair Jerome Powell's press conference following for any change in outlook from previous concerns.Questions or comments about this article and/or author? Click here>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Sam Altman said none of his 'best people' at OpenAI were enticed by Meta's $100 million signing bonuses
Meta tried to recruit OpenAI's top talent with $100 million signing bonuses, says Sam Altman. Altman said that so far, "none of our best people have decided to take them up on that." Meta recently made a $15 billion investment in data-labeling firm Scale AI. Sam Altman, the CEO of OpenAI, said Meta's attempts to poach his best staff with generous signing bonuses were not successful. Altman talked about the competition OpenAI faces from Meta on his brother's podcast "Uncapped with Jack Altman," in an episode that aired on Tuesday. "I've heard that Meta thinks of us as their biggest competitor, and I think it is rational for them to keep trying. Their current AI efforts have not worked as well as they've hoped," Altman said of Meta's $15 billion investment in data-labeling firm Scale AI. But Altman said he found it "crazy" when Meta tried to recruit OpenAI's employees by offering them $100 million signing bonuses if they jumped ship. "I'm really happy that at least so far, none of our best people have decided to take them up on that," Altman said. "People sort of look at the two paths and say, 'Alright, OpenAI's got a really good shot, a much better shot actually, delivering on superintelligence and also may eventually be the more valuable company,'" he continued. Meta has a $1.77 trillion market capitalization, and OpenAI was last valued at $300 billion in March. Altman said Meta's approach of growing its talent pool by dangling eye-watering pay packages could come at the expense of its culture. "The strategy of a ton of upfront guaranteed comp and that being the reason you tell someone to join, like really the degree to which they're focusing on that and not the work and not the mission, I don't think that's going to set up a great culture," Altman said. "There's many things I respect about Meta as a company, but I don't think they are a company that's like great at innovation," he added. The hunt for AI talent has been heating up as companies seek to dominate the field. Aravind Srinivas, the founder and CEO of AI search startup Perplexity, said in a March 2024 episode of the "Invest Like The Best" podcast that companies must offer "amazing incentives and immediate availability of compute" if they want to hire AI talent. "I tried to hire a very senior researcher from Meta, and you know what they said? 'Come back to me when you have 10,000 H100 GPUs,'" Srinivas said, referencing the AI chips made by Nvidia. Naveen Rao, the vice president of AI at Databricks, said in an interview with The Verge last year that there are fewer than 1,000 researchers who are capable of building frontier AI models. "It's like looking for LeBron James," Rao said. "There are just not very many humans who are capable of that." Representatives for OpenAI and Meta did not respond to requests for comment from Business Insider. Read the original article on Business Insider
Washington Post
33 minutes ago
- Washington Post
A judge could advance Purdue Pharma's $7B opioid settlement after all 50 states back it
All 50 U.S. states have agreed to the OxyContin maker Purdue Pharma 's latest plan to settle thousands of lawsuits over the toll of opioids . A judge on Wednesday is being asked to clear the way for local governments and individual victims to vote on it. Government entities, emergency room doctors, insurers, families of children born into withdrawal from the powerful prescription painkiller, individual victims and their families and others would have until Sept. 30 to vote on whether to accept the deal, which calls for members of the Sackler family who own the company to pay up to $7 billion over 15 years.
San Francisco Chronicle
35 minutes ago
- San Francisco Chronicle
Firms led by US military veterans deliver aid in Africa and Gaza, alarming humanitarian groups
ON A PLANE OVER UPPER NILE STATE, South Sudan (AP) — Swooping low over the banks of a Nile River tributary, an aid flight run by retired American military officers released a stream of food-stuffed sacks over a town emptied by fighting in South Sudan, a country wracked by conflict. Last week's air drop was the latest in a controversial development — private contracting firms led by former U.S. intelligence officers and military veterans delivering aid to some of the world's deadliest conflict zones, in operations organized with governments that are combatants in the conflicts. The moves are roiling the global aid community, which warns of a more militarized, politicized and profit-seeking trend that could allow governments or combatants to use life-saving aid to control hungry civilian populations and advance war aims. In South Sudan and Gaza, two for-profit U.S. companies led by American national security veterans are delivering aid in operations backed by the South Sudanese and Israeli governments. The American contractors say they're putting their security, logistics and intelligence skills to work in relief operations. Fogbow, the U.S. company that carried out last week's air drops over South Sudan, says it aims to be a 'humanitarian' force. 'We've worked for careers, collectively, in conflict zones. And we know how to essentially make very difficult situations work,' said Fogbow President Michael Mulroy, a retired CIA officer and former senior defense official in the first Trump administration, speaking on the airport tarmac in Juba, South Sudan's capital. But the U.N. and many leading non-profit groups say U.S. contracting firms are stepping into aid distribution with little transparency or humanitarian experience, and, crucially, without commitment to humanitarian principles of neutrality and operational independence in war zones. 'What we've learned over the years of successes and failures is there's a difference between a logistics operation and a security operation, and a humanitarian operation,' said Scott Paul, a director at Oxfam America. ''Truck and chuck' doesn't help people,' Paul said. 'It puts people at risk.' 'We don't want to replace any entity' Fogbow took journalists up in a cargo plane to watch their team drop 16 tons of beans, corn and salt for South Sudan's Upper Nile state town of Nasir. Residents fled homes there after fighting erupted in March between the government and opposition groups. Mulroy acknowledged the controversy over Fogbow's aid drops, which he said were paid for by the South Sudanese government. Shared roots in Gaza and U.S. intelligence Fogbow was in the spotlight last year for its proposal to use barges to bring aid to Gaza, where Israeli restrictions were blocking overland deliveries. The United States focused instead on a U.S. military effort to land aid via a temporary pier. Since then, Fogbow has carried out aid drops in Sudan and South Sudan, east African nations where wars have created some of the world's gravest humanitarian crises. Fogbow says ex-humanitarian officials are also involved, including former U.N. World Food Program head David Beasley, who is a senior adviser. Operating in Gaza, meanwhile, Safe Reach Solutions, led by a former CIA officer and other retired U.S. security officers, has partnered with the Gaza Humanitarian Foundation, a U.S.-backed nonprofit that Israel says is the linchpin of a new aid system to wrest control from the U.N., which Israel says has been infiltrated by Hamas, and other humanitarian groups. Starting in late May, the American-led operation in Gaza has distributed food at fixed sites in southern Gaza, in line with Prime Minister Benjamin Netanyahu's stated plan to use aid to concentrate the territory's more than 2 million people in the south, freeing Israel to fight Hamas elsewhere. Aid workers fear it's a step toward another of Netanyahu's public goals, removing Palestinians from Gaza in 'voluntary' migrations. Since then, several hundred Palestinians have been killed and hundreds more wounded in near daily shootings as they tried to reach aid sites, according to Gaza's Health Ministry. Witnesses say Israeli troops regularly fire heavy barrages toward the crowds in an attempt to control them. The Israeli military has denied firing on civilians. It says it fired warning shots in several instances, and fired directly at a few 'suspects' who ignored warnings and approached its forces. It's unclear who is funding the new operation in Gaza. No donor has come forward, and the U.S. says it's not funding it. In response to criticism over its Gaza aid deliveries, Safe Reach Solutions said it has former aid workers on its team with 'decades of experience in the world's most complex environments' who bring "expertise to the table, along with logisticians and other experts.' South Sudan's people ask: Who's gett ing our aid drops? Last week's air drop over South Sudan went without incident, despite fighting nearby. A white cross marked the drop zone. Only a few people could be seen. Fogbow contractors said there were more newly returned townspeople on previous drops. Fogbow acknowledges glitches in mastering aid drops, including one last year in Sudan's South Kordofan region that ended up with too-thinly-wrapped grain sacks split open on the ground. After gaining independence from Sudan in 2011, South Sudan has struggled to emerge from a civil war that killed nearly 400,000 people. Rights groups say its government is one of the world's most corrupt, and until now has invested little in quelling the dire humanitarian crisis. South Sudan said it engaged Fogbow for air drops partly because of the Trump administration's deep cuts in U.S. Agency for International Development funding. Humanitarian Minister Albino Akol Atak said the drops will expand to help people in need throughout the country. But two South Sudanese groups question the government's motives. 'We don't want to see a humanitarian space being abused by military actors ... under the cover of a food drop," said Edmund Yakani, head of the Community Empowerment for Progress Organization, a local civil society group. Asked about suspicions the aid drops were helping South Sudan's military aims, Fogbow's Mulroy said the group has worked with the U.N. World Food Program to make sure 'this aid is going to civilians.' 'If it wasn't going to civilians, we would hope that we would get that feedback, and we would cease and desist,' Mulroy said. In a statement, WFP country director Mary-Ellen McGroarty said: 'WFP is not involved in the planning, targeting or distribution of food air-dropped' by Fogbow on behalf of South Sudan's government, citing humanitarian principles. A 'business-driven model' Longtime humanitarian leaders and analysts are troubled by what they see as a teaming up of warring governments and for-profit contractors in aid distribution. When one side in a conflict decides where and how aid is handed out, and who gets it, 'it will always result in some communities getting preferential treatment,' said Jan Egeland, executive director of the Norwegian Refugee Council. Sometimes, that set-up will advance strategic aims, as with Netanyahu's plans to move Gaza's civilians south, Egeland said. The involvement of soldiers and security workers, he added, can make it too 'intimidating' for some in need to even try to get aid. Until now, Western donors always understood those risks, Egeland said. But pointing to the Trump administration's backing of the new aid system in Gaza, he asked: 'Why does the U.S. ... want to support what they have resisted with every other war zone for two generations?' Mark Millar, who has advised the U.N. and Britain on humanitarian matters in South Sudan and elsewhere, said involving private military contractors risks undermining the distinction between humanitarian assistance and armed conflict. Private military contractors 'have even less sympathy for a humanitarian perspective that complicates their business-driven model," he said. 'And once let loose, they seem to be even less accountable.'
