Wall Street Closes a Week of Losses Amid Israel-Iran Tensions: The U.S. stock market ended a two-week winning streak,
As investors rushed to safe-haven assets following Israel’s military strikes on Iran,
which were met with retaliatory attacks from Tehran,
fueling concerns that the escalation could lead to a broader economic and global conflict.

 

Contents

Index Performance

Military Escalation

Energy Stocks

VIX Index

Risk Appetite

Oil and Inflation

Interest Rate Policy

U.S. Consumer Sentiment

 

 

Move with the market

 

 

Index Performance

The S&P 500 index fell by 1.1%, marking its worst session since May 21,
while the Nasdaq declined by approximately 1.3%.
The “Magnificent Seven” basket of stocks dropped by 0.8%,

led by declines in Microsoft, Alphabet, Apple, Nvidia, Amazon, and Meta.

Tesla was the only stock in the group to post gains, rising 1.9%.
Over the week, the S&P 500 fell by 0.4%, and the Nasdaq 100 dropped 0.6%.
These shifts marked a reversal from the previous two weeks of steady gains,
as Wall Street closes a week of losses amid Israel-Iran tensions and rising geopolitical uncertainty.

 

Military Escalation Weighs on Markets

U.S. stocks fell after Israel targeted Iranian nuclear facilities.
The indices hit their session lows as Iran launched hundreds of missiles
in response to Israeli airstrikes on military and nuclear infrastructure in Tehran.
This widened the scope of the conflict and raised fears it could engulf the region and rattle global markets.

Jamie Cox, managing partner at Harris Financial Group, said:

“As the weekend approaches, fears are growing over more attacks and retaliatory responses in the Middle East.”

 

Energy and Defense Stocks Rise Amid Broader Decline

Ten of the eleven sectors in the S&P 500 declined, with financials,
technology, and real estate, leading the losses.
Energy was the only sector to gain, as oil prices surged by up to 13%,
boosting shares of major oil companies like ExxonMobil and Chevron.

Defense stocks like Raytheon Technologies and Lockheed Martin also rose.
Meanwhile, airline stocks dropped,
with Delta Air Lines and American Airlines down 3.8% and 4.9% respectively,
after the Israeli strikes.
Travel stocks such as Royal Caribbean Cruises, Carnival, and Norwegian Cruise Line declined.

Additional pressure came as rising oil prices pushed
investors toward safe-haven assets like U.S. Treasury bonds.
Israel said the strikes on Tehran, which initially spiked oil prices before a partial retreat,
might continue in the coming days.

Iran is one of the world’s largest oil producers,
So, a wider war could keep crude prices elevated for an extended period.

 

 

Boost your portfolio

 

 

 

VIX Index Surges Amid Escalating Anxiety

President Donald Trump urged Iran to accept a nuclear deal to avoid further attacks.
In this context, Wall Street’s so-called “fear gauge,” the Cboe Volatility Index (VIX),
climbed to around 21 points, its highest level in three weeks.

 

Risk Appetite Shrinks and Growth Stocks Tumble

Investors offloaded high-risk assets, with the Russell 2000,
which tracks small-cap stocks, falling nearly 2%.
The Goldman Sachs index, which tracks unprofitable tech firms like Roku and Peloton, dropped by around 1%.

According to Bloomberg, the S&P 500 had moved no more than 0.6%
up or down in 11 of the past 12 sessions until the day before yesterday,
marking the longest stretch since last December.

 

Oil and Inflation: A Double Threat to the Fed

If oil prices continue rising, inflation rates will likely remain elevated,
increasing pressure on the Federal Reserve and global central banks,
particularly amid ongoing Trump-led trade wars.

Young Yu Ma, Chief Investment Strategist at PNC Asset Management Group, commented:

Despite heightened tensions, the stock market is trying to assess
Whether these developments will have long-term effects.
Geopolitical events like these are often reversed within days or weeks,
as long as they don’t trigger sustained global economic repercussions.”

 

Interest Rate Policy: Fed Remains Cautious

The Federal Reserve has shown caution this year regarding interest
rate cuts after implementing several in the second half of 2024.
Policymakers monitor the potential economic harm from Trump’s tariffs and their impact on U.S. inflation.

Thomas Martin, Senior Portfolio Manager at Globalt Investments, said:

“These developments add to investor uncertainty,
But they likely won’t alter the Fed’s stance, primarily since the attacks didn’t target oil infrastructure,
making long-term effects on oil prices and inflation unlikely.”

 

Improvement in U.S. Consumer Sentiment

Meanwhile, traders overlooked preliminary data from the University of Michigan,

which showed the most significant improvement in consumer sentiment
for June since January 2024, driven by easing economic concerns and better short-term U.S. inflation expectations.

 

Wall Street Closes a Week of Losses Amid Israel-Iran Tensions