U.S. stock markets closed the week ending June 20, 2025, with mixed results, reflecting a cautious investor sentiment driven by escalating geopolitical risks in the Middle East and the Federal Reserve’s latest policy signals. The S&P 500 dipped 0.3%, the Nasdaq Composite eked out a modest 0.1% gain, and the Dow Jones Industrial Average fell 0.1%, underscoring a market grappling with uncertainty yet showing resilience in pockets of strength.
Fed Holds Steady, Signals Two Cuts for 2025
The Federal Reserve’s decision to maintain interest rates at 4.25%–4.5% on Wednesday, June 18, was widely anticipated, but the accompanying Summary of Economic Projections (SEP) sparked debate. The Fed’s “dot plot” revealed a split among policymakers: seven members projected no rate cuts in 2025, up from four in March, while eight foresaw a total of 50 basis points in reductions. The median forecast pegged the federal funds rate at 3.9% by year-end, implying two 25-basis-point cuts.
Christopher Waller, a Fed governor, hinted at a possible rate cut as early as July, which sent short-dated Treasury yields, like the two-year note, slipping to 3.9%. Investors interpreted this as a dovish signal, though uncertainty lingered.
Middle East Tensions Roil Oil, Boost Energy Stocks
Geopolitical developments dominated headlines as the Israel-Iran conflict intensified. Brent crude oil prices spiked 11% midweek, hitting nearly $77 per barrel, before retreating slightly to a 3.6% weekly gain. The surge fueled inflationary concerns but lifted energy stocks, with the sector emerging as the week’s top performer. Defense stocks also rallied, buoyed by fears of broader regional instability.
“The market’s reaction to oil price swings shows how sensitive investors are to supply disruptions,” said Zachary Hill, head of portfolio management at Horizon Investments. “Energy stocks are a hedge, but rising crude could reignite stagflation fears.”
U.S. President Donald Trump’s deliberation over potential military support for Israel, with a decision expected within two weeks, added to the unease. Markets rallied late in the week after the U.S. signaled openness to negotiations with Iran, providing some relief.
Tech and Chips Falter, IBM Shines
Technology stocks faced headwinds, with chipmakers sliding nearly 1% after reports that the U.S. might revoke semiconductor waivers for allies with plants in China. The Nasdaq’s 0.51% drop on Friday reflected this pressure, though it managed a weekly gain. Healthcare lagged as the worst-performing sector, weighed down by regulatory news, including the ouster of an FDA official over a cell therapy dispute.
By: Montana Newsroom staff
