MARKET COMMENTARY

Last week brought softer inflation data than expected, news of a U.S.-China trade deal, and an Israel-Iran conflict that unnerved the market. With so many developments last week, read on for a summary of what you should know.

Weekly Stock Index Performance

Fueled by continued tariff concerns and geopolitical fears amid attacks between Israel and Iran, all three major indexes fell last week, with the Dow slipping back into negative territory for the year.

Overall:

• The S&P 500 fell 0.4%. 
• The Dow Jones Industrial Average lost 1.3%. 
• The Nasdaq Composite decreased by 0.6%.

Inflation Data

• Consumer Price Index data for May came in lower than expected, with a 2.4% annual inflation rate vs. the 2.5% forecast. The lower reading was likely thanks in part to lower energy prices, with the price of gasoline down 12% year-over-year.
• Producer Price Index data showed a lower month-over-month inflation reading than expected, with the annual inflation rate rising 2.6%, up from 2.5% last month. 
• At this time, we have yet to see any huge tariff-driven jumps in inflation, though some economists expect to see jumps later this summer, with increases likely to be seen first in so-called •core goods,• which exclude food and energy.

Prices at the Pump to Rise?

• As noted in reference to inflation metrics, gasoline prices have remained low and shown stability in recent months. However, amid the Israel-Iran conflict, U.S. crude oil prices rose by 7.3% on Friday, the biggest single-day gain since the beginning of the Russia-Ukraine war in March 2022.  
• As a result of this increase, gas prices may rise by 10 to 25 cents per gallon over the next few weeks.
• Past attacks between Israel and Iran have caused a similar spike, followed by a decline once further escalation was avoided. We will see how this situation plays out over the coming days.

U.S.-China Trade Deal

• Amid continued tensions, the U.S. and China reached a deal during talks in London last week between the two nations.
• President Donald Trump said China had agreed to provide companies in the United States with rare earth metals and magnets, and the U.S. has promised it would not follow through with the revocation of Chinese students• visas.
• Treasury Secretary Scott Bessent testified to Congress that the deal was narrow in focus and that a more comprehensive trade deal will •be a much longer process.•
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The Week Ahead: Fed Meeting

• All eyes this week turn to the Federal Open Market Committee (FOMC) meeting, scheduled for June 17-18.
• While there is virtually no likelihood of a rate cut at this meeting, market watchers will be paying attention to Fed commentary around future cuts as well as its dot plot, which shows Fed officials' future expectations for interest rates and the economy.