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June 16, 2025

Beacon Weekly Investment Insights 6.16.25

Lead of Investment Strategy, Charles Pawlik, CFA, CFP®, provides insights to guide you through changing market conditions. Please read the full text below or download the PDF version.

Equity markets finished last week in slightly negative territory, with the announcement at the end of the week that Israel launched a series of strikes on Iran’s nuclear sites driving volatility and erasing earlier gains for equity indices. The S&P 500 was down -0.39% for the week, with the Dow Jones down -1.32% and the tech-heavy Nasdaq finishing the week down -0.63%. As is typically the case with escalating conflicts in the Middle East, oil prices moved up meaningfully. WTI crude prices were up 13% last week, which was the largest weekly gain since October 2022. The dollar continued its downward trajectory with the DXY (U.S. Dollar Index) moving down 1.0%, and having declined in 3 of the last 4 weeks. Gold, often viewed as a safe-haven during geopolitical conflicts, built on recent strength and moved up 3.2% last week. The 10-year treasury yield moved down from 4.51% to 4.42% to end the week, with the market absorbing $119 billion in new treasury issuance including $39 billion in 10-year treasuries, which saw strong demand. Despite the on-going conflict, equity markets look to be finding some relief from comments made by President Trump over the weekend that there is a good chance of an Israel-Iran peace deal.

Trade negotiations continue to dominate headlines and drive volatility as well. US-China talks in London last week led to an agreement after more than two days of negotiations, with the agreed upon framework largely confirming the Geneva consensus. The agreement has China opening up exports of rare-earth products (China put a six-month limit on its rare-earth export licenses) and allowing up to a 55% tariff on China’s imports to the U.S., with Chinese students allowed back in U.S. universities. The market continues to closely watch for more negotiations on this front, and grapple with on-going uncertainty around broader reciprocal tariffs as the July 9th deadline to negotiate deals approaches. With that said, there have been headlines as of late from the likes of Treasury Scott Bessent, commenting that the deadline may be extended for countries that are negotiating in good faith.

As on-going uncertainty around geopolitical conflicts, trade, and policy continues to drive volatility, we maintain our focus on investing in a diversified portfolio that has exposure to several different asset classes both domestically and overseas, as well as high-quality fixed income and real assets exposure. In addition, our stock selection philosophy continues to revolve around investing in high quality companies with strong profitability and free cash flow, alongside strong balance sheets that position the companies well to weather volatility and continue to grow at an above average rate over the long-term.

From an economic data perspective, inflation data was front and center last week. Both the headline and Core CPI numbers came in lower than expected, with headline CPI (consumer price index) up 0.1% in May relative to expectations for a 0.2% increase. The year-over-year number did tick up to 2.4% from the prior month’s 2.3% reading, which was in line with expectations. Core CPI increased by 0.1% for May, below expectations for a 0.3% increase and down from the prior reading of 0.2%. The year-over-year increase for Core CPI was also below expectations of 2.9%, coming in at 2.8%. Likewise, PPI (producer price index) numbers came in below expectations for both the headline and core readings. Headline PPI increased by 0.1% relative to expectations for a 0.2% increase, with the core reading increasing by 0.1% relative to expectations for a 0.3% increase. Generally speaking, lower than expected inflation readings support the notion that the Fed may have cover to cut interest rates, with two rate cuts by the end of the year currently being priced in according to CME Fed Fund futures. Initial jobless claims for the week came in at 248,000, slightly above expectations for 246,000. The preliminary University of Michigan consumer sentiment reading was also released and came in well above consensus, with a reading of 60.5 vs. consensus expectations for 54.0. This was the first improvement in the reading in six months, as concerns over inflation eased somewhat.

There will be plenty for markets to pay attention to during the upcoming shortened holiday week. The FOMC meeting will be taking place this week, with the Fed interest rate decision set to be announced on Wednesday,
followed by Chair Powell’s press conference. Expectations are for the Fed to hold interest rates steady for the time-being, and reiterate that they believe that policy is currently in a good place and will remain data dependent. U.S. retail sales are set to be released on Tuesday and will be closely watched for the latest read on the consumer. Housing data including housing starts and building permits are also scheduled to be released on Wednesday, with the U.S. leading economic indicators report set to be released on Friday. President Trump will be attending the G7 Summit taking place in Canada this week, with the Israel-Iran conflict and trade taking center stage.

 

Market Scorecard:	6/13/2025	YTD Price Change
Dow Jones Industrial Average	42,197.79	-0.81%
S&P 500 Index	5,976.97	1.62%
NASDAQ Composite	19,406.83	0.50%
Russell 1000 Growth Index	4,080.00	0.93%
Russell 1000 Value Index	1,862.79	2.13%
Russell 2000 Small Cap Index	2,100.51	-5.81%
MSCI EAFE Index	2,613.86	15.56%
US 10 Year Treasury Yield	4.40%	-17 basis points
WTI Crude Oil	$72.98	1.76
Gold $/Oz.	$3,452.80	30.74%