The stock market had a wild week amid AI sentiment shifts, the SpaceX IPO and Iran news. After launching new Iran attacks on Wednesday, President Trump abruptly canceled further strikes on Thursday, saying a peace deal was imminent, triggering the market rebound.
The Dow Jones Industrial Average gained 0.7% in last week’s stock market trading, well above its 21-day line and close to all-time levels. The S&P 500 index climbed 0.65%, just reclaiming its 21-day line on Friday. The Nasdaq Composite (Nasdaq) advanced 0.7%, but stopped short of its 21-day. The Russell 2000 leapt 3.9%, hitting a record high Friday.
U.S. crude oil futures tumbled 6.25% to $84.88 a barrel last week, falling to the lowest levels in nearly two months.
The 10-year Treasury yield sank five basis points to 4.485%. Overall consumer price index (CPI) and producer price index (PPI) inflation jumped again, but could be peaking. Meanwhile, core inflation readings were relatively tame.
Small business optimism from the National Federation of Independent Business (NFIB) fell below expectations, reversing gains to pre-election levels.
Existing home sales rebounded from a seven-month low with the southern region continuing to lead activity.
The University of Michigan consumer sentiment reading rose for the first time in four months, supported by softening gasoline prices, although consumers continue to face inflation pressures.
Elon Musk’s rocket maker debuted on the Nasdaq at $150 per share, trading under the symbol SPCX. That’s above its $135 IPO price. The stock soared more than 20% shortly after it opened and closed up 19% at around $161.
The U.S. and Iran have agreed on a deal to bring their nearly four-month war to an end, with both sides declaring the immediate and permanent termination of military operations on all fronts, including in Lebanon, Pakistan Prime Minister Shehbaz Sharif and U.S. President Donald Trump said on Sunday.
Expected this week, the Federal Reserve (Fed) will hold its first meeting under new Chairman Kevin Warsh on June 16-17.
We can also expect retail sales, industrial production, and the leading index, as well as housing market data, to be released this coming week.
If you hit the Looking Ahead link, you will get a report written by Wells Fargo. Below are excerpts from that research.
Week review: June 8-12
Economic news
- CPI data for May showed that inflation surged to the fastest pace since April 2023, mainly due to price pressures centered on components exposed to supply shocks, including fuel, airfares, metals, and computer hardware amid the Iran war and the data center build out.
- CPI inflation rose 0.5% month-over-month (M/M) and 4.2% year-over-year (Y/Y). Additionally, energy prices accounted for more than 60% of the increase in May.
- Core CPI remains more subdued, slightly increasing 0.2% M/M and bringing the Y/Y to 2.9%.
- PPI data shared a similar story, with inflation at the wholesale level surging to a November 2022 high of 6.5% Y/Y.
- Headline PPI Rose 1.1% M/M, well above the expected 0.7%. This uptick was driven by a significant 23% jump in gasoline prices coupled with a 17% rise in truck transportation costs. Meanwhile, core PPI rose 0.4% M/M and 4.9% Y/Y.
- Preliminary consumer sentiment from the University of Michigan increased after three months of declines.
- The consumer sentiment reading increase to 48.9, partially reversing the prior decline from a record low in May. The increase was mainly driven by lower gasoline prices while this is positive, consumers still face elevated inflation pressures stemming from the Iran war.
- The trade deficit for April flattened amid a surge in oil exports offsetting imports from the AI buildout.
- The value of exports rose 2.6% M/M, driven by a 60% increase in crude oil exports. Meanwhile, imports advanced by 2% M/M, driven by semiconductors and computers.
- NFIB small business optimism for May came in at 95.3, falling to its lowest level since October 2024. Small business owners have struggled with rising prices, reporting inflation-related issues due to the Iran war.
- Existing home sales rose 3.2% M/M to an annualized rate of 4.17 million in May, as new listings and sales continued to maintain their pace alongside elevated mortgage rates.
Looking Ahead to this week: June 15-19
U.S.
- The highlight this week will be the Fed’s June 16-17 meeting, with markets broadly anticipating no change in the Fed’s policy rate. The updated Summary of Economic Projections, and Kevin Warsh’s comments will follow his first meeting as Fed chair.
- Other potentially market moving reports include May’s retail sales and industrial production.
- Also on tap: May’s leading index and Import and Export Price Indexes; April‘s business inventories; and June measures of economic activity from the New York and Philadelphia regional Fed banks.
- Rounding out the docket is a flurry of housing market data, including May’s pending home sales, housing starts, and preliminary building permits, along with June homebuilder sentiment.
Asia
- In China, the focus will be on May’s industrial production, retail sales, home prices, and surveyed jobless rate.
- The Bank of Japan will hold a policy meeting on Monday and Tuesday, while economic data includes the national CPI and trade balance, along with April‘s Tertiary (service) Industry Index and core machine orders.
- The Reserve Bank of Australia’s meeting early in the week will coincide with Australia’s May leading index.
- Elsewhere in the region, South Korea’s May Export Price Index and PPI hit the tape.
Europe
- In Europe, the highlight will be the G7 Leaders Summit hosted by France, along with policy decisions from several European central banks. Meanwhile, Eurozone economic data during the week includes June‘s ZEW expectations for economic growth, the finalized May CPI, and April‘s industrial production and trade balance.
- From the U.K., watch for June’s consumer confidence and house prices, in addition to May’s CPI, a companion Retail Price Index, PPI, retail sales, and jobless claims.
- Other releases include Germany’s May PPI and June ZEW index of current condition conditions.
